Question
1. You obtain a loan for $10,000, and are required to pay back the loan in 4 annual payments of $2700. Diagram the cash flow
1. You obtain a loan for $10,000, and are required to pay back the loan in 4 annual payments of
$2700. Diagram the cash flow for this situation.
2. Write the formula for a single payment compound amount factor. Then determine the future
worth of a $10,000 investment earning 4.25% interest.
3. Without looking it up, write the formula for a single payment present worth factor by using the
formula for a single payment compound amount factor.
5. A(P/A, g, i, N)(F/P, i, N) = _________________ worth? (Fill in the blank.) How did you derive
your answer?
6. In a linear of geometric gradient series, what is the value of G or g at the end of year 1?
7. List two methods that you could use to find an unknown interest rate. For example, if you made
an investment and you wanted to double its worth in 10 years, how much growth per year would
this require of your investment? (Growth in the investment is equivalent to interest rate.)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started