D $1.000 Humber of your N Future we VI Formul ANA Creating with vs at var interested in Yerine news Pare96) 13 with years in the bocperted and overal (1 14 (6) apri HE 14 Time value of money Finding FV Investment V AN Finding PV Future) 43 Dec 4.20 Press (PV) 45 Finding that provided by the security wgir She came Shoull MESS AN AL000 Formi *** Formas H THE DE INA www MA www. www HIVA $1,000 11% 6 44 45 d. Finding the rate of return provided by the security 46 Cost of security (PV) $1,000 47 Future value of security (FV) $3,000 48 Number of years (N) 6 49 Rate of retum (1) #N/A 50 51 e. Calculating the number of years required to double the population 52 Current population in millions (PV) 35.9 53 Growth rate (1) 4% 54 Doubled population in millions (FV) 55 Number of years required to double (N) 56 57 f. Finding the PV and FV of an ordinary annuity 58 Annuity (PMT) 59 Interest rate (1) 60 Number of years (N) 61 Present value of ordinary annuity (PV) #N/A 62 Future value of ordinary annuity (FV) #N/A 63 64 g. Recalculating the PV and FV for part f if the annuity is an annuity due 65 Present value of annuity due (PV) 66 Future value of annuity due (FV) #N/A #N/A 67 68 h. Recalculating the PV and the FV for parts a and c if the interest rate is semiannually compounded 69 Future value (FV) 70 Present value (PV) #N/A #N/A 71 72 1. Finding the annual payments for an ordinary annuity and an annuity due 73 Present value (PV) $1,000 74 Discount rate (1) 6% 75 Number of years (N) 12 76 Annual payment for ordinary annuity (PMT,) 77 Annual payment for annuity due (PMT) #N/A #N/A 78 79. Finding the PV and the FV of an investment that makes the following end-of-year payments 80 Year Payment 81 1 $100 82 2 $200 83 3 $500 84 85 Interest rate (1) 6% 86 Present value of investment (PV) 87 Future value of investment (FV) #N/A N/A 88 #N/A #NA EM Cather p Stam A then of total Indischetze COLOUR W Sheett Masa Panet forme for for and T ww Pr Fayres (1997) For 20000 -221 51111 1112 a. Find the FV of $1,000 invested to earn 8% after 6 years. Round your answer to the nearest cent. $ b. What is the investment's FV at rates of 0%, 5%, and 20% after 0, 1, 2, 3, 4, and 5 years? Round your answers to the nearest cent Interest Rate Year 0% 5% 20% 0 $ $ $ 1 $ $ $ 2 $ $ $ 3 $ S $ 4 $ $ $ 5 $ $ Choose the correct graph of future value as a function of time and rate. Note: blue line is for 0%, orange line is for 5%, and grey line is for 20%. The correct graph is Choose the correct graph of future value as a function of time and rate. Note: blue line is for 0%, orange line is for 5%, and grey line is for 20%. The correct graph is 7000 FV as Function of Time and Rate 6000- 5000 4000 3000 2000- 1000 Year Future Value (5) Future Value (5) 7000- 6000 5000 4000 3000 2000 1000 Future Value (5) 7000- 6000 5000 4000 3000 2000+ 1000 FV as Function of Time and Rate Year FV as Function of Time and Rate Year 7000 FV as Function of Time and Rate 6000 5000 4000 3000 2000- 4 1000 Year c. Find the PV of $1,000 due in 6 years if the discount rate is 8%. Round your answer to the nearest cent. S d. A security has a cost of $1,000 and will return $3,000 after 6 years. What rate of return does the security provide? Round your answer to two decimal places. e. Suppose California's population is 35.9 million people, and its population is expected to grow by 4% annually. How long will it take for the population to double? Round your answer to the nearest whole number.. 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: $ FV of ordinary annuity: S Future Value (5) 9. 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: $ FV of annuity due: $ 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: $ PV with semiannual compounding: s 1. 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 6%. Round your answers to the nearest cent. Annual payment for ordinary annuity: $ Annual payment for annuity due: $ 3. Find the PV and the FV of an investment that makes the following end-of-year payments. The interest rate is 6% Year Payment $100 1 2 $200 3 $500 Round your answers to the nearest cent. PV of investment: $ FV of investment: $ k. Five banks offer nominal rates of 4% 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 1. What effective annual rate does each bank pay? If you deposit $4,000 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 k. Five banks offer nominal rates of 4% 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 1. What effective annual rate does each bank pay? If you deposit $4,000 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 EAR % % % FV after 1 year $ 5 $ $ FV after 2 years $ 5 2. 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. Nominal rate % % 3. Suppose you don't have the $4,000 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 ge must the payments be to each bank? Round your answers to the nearest cent. D E Payment 4. Even if the five banks provided the same effective annual rate, would a rational investor be indifferent between the banks? frequently, It is more likely that an investor would prefer the bank that compounded 1. Suppose you borrow $16,000. The interest rate is 6%, 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", Repayment Ending Beginning Balance Balance of Principal Year Payment Interest $ 1 1. Suppose you borrow $16,000. The interest rate is 6%, 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 Ending Repayment of Principal Year Balance Payment Interest Balance 1 $ $ 2 $ $ 3 5 $ $ Numeric field 4 $ $ $ $ Choose the correct graph that shows how the payments are divided between interest and principal repayment over time. The correct graph is Breakdown of payments 6000 5000 4000+ 3000 2000- III 1000 Year $ $ $ Dollar Values 6000 5000+ 4000+ 3000+ 2000+ 1000+ $ $ B. 1 $ $ $ Breakdown of payments Year C. Breakdown of payments IIII Year 6000 5000 4000+ 3000+ 2000+ 1000 payment of Principal ( Interest (5) Dollar Vals 6000 5000 4000+ 3000 2000+ 1000+ Repayment of Principal (1) Invest (5) Breakdown of payments IIII Year Dollar Values