Question
a. Find the FV of $1,000 invested to earn 8% after 6 years. Round your answer to the nearest cent. $ fill in the blank
a. Find the FV of $1,000 invested to earn 8% after 6 years. Round your answer to the nearest cent.
$ fill in the blank
b. What is the investment's FV at rates of 0%, 4%, and 20% after 0, 1, 2, 3, 4, and 5 years? Round your answers to the nearest cent.
| Year | Interest Rate | ||
| 0% | 4% | 20% | |
| 0 | $ fill in the blank | $ fill in the blank | $ fill in the blank |
| 1 | $ fill in the blank | $ fill in the blank | $ fill in the blank |
| 2 | $ fill in the blank | $ fill in the blank | $ fill in the blank |
| 3 | $ fill in the blank | $ fill in the blank | $ fill in the blank |
| 4 | $ fill in the blank | $ fill in the blank | $ fill in the blank |
| 5 | $ fill in the blank | $ fill in the blank | $ fill in the blank |
c. Find the PV of $1,000 due in 6 years if the discount rate is 8%. Round your answer to the nearest cent.
$ fill in the blank
d. A security has a cost of $1,000 and will return $4,000 after 6 years. What rate of return does the security provide? Round your answer to two decimal places.
fill in the blank %
e. Suppose California's population is 34.0 million people, and its population is expected to grow by 3% annually. How long will it take for the population to double? Round your answer to the nearest whole number.
fill in the blank years
f. Find the PV of an ordinary annuity that pays $1,000 each of the next 6 years if the interest rate is 11%. Then find the FV of that same annuity. Round your answers to the nearest cent.
PV of ordinary annuity: $ fill in the blank FV of ordinary annuity: $ fill in the blank
g. How will the PV and FV of the annuity in part f change if it is an annuity due rather than an ordinary annuity? Round your answers to the nearest cent.
PV of annuity due: $ fill in the blank FV of annuity due: $ fill in the blank
h. What will the FV and the PV for parts a and c be if the interest rate is 8% with semiannual compounding rather than 8% with annual compounding? Round your answers to the nearest cent.
FV with semiannual compounding: $ fill in the blank PV with semiannual compounding: $ fill in the blank
i. Find the annual payments for an ordinary annuity and an annuity due for 12 years with a PV of $1,000 and an interest rate of 7%. Round your answers to the nearest cent.
| Annual payment for ordinary annuity: | $ fill in the blank |
| Annual payment for annuity due: | $ fill in the blank |
j. Find the PV and the FV of an investment that makes the following end-of-year payments. The interest rate is 7%.
| Year | Payment |
| 1 | $100 |
| 2 | $300 |
| 3 | $600 |
Round your answers to the nearest cent.
PV of investment: $ fill in the blank FV of investment: $ fill in the blank
k. Five banks offer nominal rates of 5% on deposits, but A pays interest annually, B pays semiannually, C pays quarterly, D pays monthly, and E pays daily. Assume 365 days in a year.
-
What effective annual rate does each bank pay? If you deposit $3,500 in each bank today, how much will you have in each bank at the end of 1 year? 2 years? Round your answers to two decimal places.
A B C D E EAR fill in the blank % fill in the blank % fill in the blank % fill in the blank % fill in the blank % FV after 1 year $ fill in the blank $ fill in the blank $ fill in the blank $ fill in the blank $ fill in the blank FV after 2 years $ fill in the blank $ fill in the blank $ fill in the blank $ fill in the blank $ fill in the blank -
If the TVM is the only consideration, what nominal rate will cause all of the banks to provide the same effective annual rate as Bank A? Round your answers to two decimal places.
B C D E Nominal rate fill in the blank % fill in the blank % fill in the blank % fill in the blank % -
Suppose you don't have the $3,500 but need it at the end of 1 year. You plan to make a series of deposits annually for A, semiannually for B, quarterly for C, monthly for D, and daily for E with payments beginning today. How large must the payments be to each bank? Round your answers to the nearest cent.
A B C D E Payment $ fill in the blank $ fill in the blank $ fill in the blank $ fill in the blank $ fill in the blank -
Even if the five banks provided the same effective annual rate, would a rational investor be indifferent between the banks?
It is more likely that an investor would prefer the bank that compounded (more,less) frequently.
l. Suppose you borrow $14,000. The interest rate is 7%, and it requires 4 equal end-of-year payments. Set up an amortization schedule that shows the annual payments, interest payments, principal repayments, and beginning and ending loan balances. Round your answers to the nearest cent. If your answer is zero, enter "0".
| Beginning | Repayment | Ending | |||
| Year | Balance | Payment | Interest | of Principal | Balance |
| 1 | $ fill in the blank | $ fill in the blank | $ fill in the blank | $ fill in the blank | $ fill in the blank |
| 2 | $ fill in the blank | $ fill in the blank | $ fill in the blank | $ fill in the blank | $ fill in the blank |
| 3 | $ fill in the blank | $ fill in the blank | $ fill in the blank | $ fill in the blank | $ fill in the blank |
| 4 | $ fill in the blank | $ fill in the blank | $ fill in the blank | $ fill in the blank | $ fill in the blank |
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Understanding Terrorist Finance
Authors: T. Wittig
2011th Edition
0230291848, 978-0230291843
