14. Compute the cost of not taking the following cash discounts. (Use a 360-day year. Do not round intermediate calculations. Input your nal answers as a percent rounded to 2 decimal places.) Cost of Lost Discount 2/13, net 50 % 2/20, net 50 % 3/18, net 65 % 9-9.5!" 3/18, net 150 % 15. Dr. Ruth is going to borrow $5,700 to help write a book. The loan is for one year and the money can either be borrowed at the prime rate or the LIBOR rate. Assume the prime rate is 12 percent and LIBOR 2.5 percent less. Also assume there will be a $41 transaction fee with LIBOR (this amount must be added to the interest oost with LIBOR). a. What is the effective interest rate on the LIBOR |oan?(Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Effective interest rate l l% b. Which loan has the lower effective interest cost? \"F LIBOR 0 Prime 16. Mary Ott is going to borrow $14,600 for 45 days and pay $185 interest. What is the effective rate of interest if the loan is discounted? (Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Effective rate on a discounted loan [ '% 17. Neveready Flashlights Inc. needs $324,000 to take a cash discount of 2/15, net 73. A banker will loan the money for 58 days at an interest cost of $11,100. a. What is the effective rate on the bank loan? (Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Effective rate of interest j Q b. How much would it cost (in percentage terms) if the rm did not take the cash discount but paid the bill in 73 days instead of 15 days? (Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) East of not taking a cash discount ' lg. c. Should the rm borrow the money to take the discount? 0 No b Yes d. If the banker requires a 20 percent compensating balance, how much must the rm borrow to end up with the $324,000? Amount to be borrowed 1 1% e-1. What would be the effective interest rate in part d if the interest charge for 58 days were $16,700? (Use a 360-day year. Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Effective rate of interest e-2. Should the rm borrow with the 20 percent compensating balance requirement? (The rm has no funds to count against the compensating balance requirement.) 'A' Yes ONO 18. If you borrow $5,500 at $500 interest for one year, what is your effective interest rate for the following payment plans? (Input your answers as a percent rounded to 2 decimal places.) Effective Rate of Interest Annual payment % Semiannual payments Quarterly payments % % P-f'lP'? Monthly payments % 19. Determine the amount of money in a savings account at the end of 1 year, given an initial deposit of $9,500 and an annual interest rate of 12 percent when interest is compounded: Use Appendix A for an approximate answer, but calculate your nal answer using the formula and nancial calculator methods. (Do not round intermediate calculations. Round your nal answers to 2 decimal places.) i _ Futurevalue la. Annually ' b. Semiannually 'c. Quarterly 20. You need $25,156 at the end of 7 years, and your only investment outlet is an 7 percent long-term certicate of deposit (compounded annually). With the certicate of deposit, you make an initial investment at the beginning of the rst year. Use Appendix B and Appendix C for an approximate answer, but calculate your nal answer using the formula and nancial calculator methods. a. What single payment could be made at the beginning of the rst year to achieve this objective? (Do not round intermediate calculations. Round yourfinal answer to 2 decimal places.) Q Single payment made b. What amount could you pay at the end of each year annually for 7 years to achieve this same objective? (Do not round intermediate calculations. Round your nal answer to 2 decimal places.) Amount to be paid What is the present value of the following? Use Appendix B as an approximate answer, but calculate your nal answer using the formula and nancial calculator methods. a. $8,500 in 6 years at 12 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) b. $20,000 in 3 years at 11 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Present value 6. $28,300 in 9 years at 8 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Present value 22. If you invest $18,000 today, how much will you have in each of the following instances? Use Appendix A as an approximate answer, but calculate your nal answer using the formula and nancial calculator methods. a. In 7 years (-119 percent? (Do not round intermediate calculations. Round your nal answer to 2 decimal places.) Future value b. In 19 years at 8 percent? (Do not round intermediate calculations. Round your nal answer to 2 decimal places.) Future value c. In 20 years at 8 percent? (Do not round intermediate calculations. Round your nal answer to 2 decimal places.) Future value d. In 16 years at 8 percent (compounded semiannually)? (Do not round intermediate calculations. Round your nal answer to 2 decimal places.) Future value 23. Your uncle borrows $61,000 from the bank at 11 percent interest over the nine-year life of the loan. Use Appendix D for an approximate answer but calculate your nal answer using the formula and nancial calculator methods. a. What equal annual payments must be made to discharge the loan, plus pay the bank its required rate of interest? (Do not round intermediate calculations. Round your nal answer to 2 decimal places.) Annual payments ' b. How much of his rst payment will be applied to interest? To principal? (Do not round intermediate calculations. Round your nal answers to 2 decimal places.) First Payment Interest Principal c. How much of his second payment will be applied to each? (Do not round intermediate calculations. Round your nal answers to 2 decimal places.) Second Payment Interest Principal 24. Annuity payments are assumed to come at the end of each payment period (termed an ordinary annuity). However, an exception occurs when the annuity payments come at the beginning of each period (termed an annuity due). What is the future value of a 16-year annuity of $1,500 per period where payments come at the beginning of each period? The interest rate is 13 percent. Use Appendix C for an approximate answer, but calculate your nal answer using the formula and nancial calculator methods. To nd the future value of an annuity due when using the Appendix tables, add 1 to n and subtract 1 from the tabular value. For example, to nd the future value of a $100 payment at the beginning of each period for ve periods at 10 percent, go to Appendix C for n = 6 and i= 10 percent. Look up the value of 7.716 and subtract 1 from it for an answer of 6.716 or $671.60 ($100 x 6.716). (Do not round intermediate calculations. Round yourfinal answer to 2 decimal places.) Future value 25. Franklin Templeton has just invested $9,360 for his son (age one). This money will be used for his son's education 19 years from now. He calculates that he will need $40,345 by the time the boy goes to school. What rate of return will Mr. Templeton need in order to achieve this goal? Use Appendix B for an approximate answer, but calculate yournal answer using the formula and nancial calculator methods. (Do not round intermediate calculations. Round your nal answer to 2 decimal places.) Rate of return %