Exercise 6 What equal annual series of payments must be paid into a sinking fund to accumulate the following amounts? (a) $22,000 in 13 years at 6% compounded annually (b) $45,000 in 8 years at 7% compounded annually Exercise 7 Compute the value of Pin the accompanying cash flow diagram, assuming that i = 9%. $250 $250 $200 $200 $150 SISO $100 $100 Years Exercise 8 What is the equal payment series for 12 years that is equivalent to a payment series of $15.000 at the end of the first year, decreasing by $1,000 each year over 12 years? Growth rate is 8% compounded annually. Exercise 9 What value of A makes two annual cash flows equivalent at 13% compounded growth rate annually? $120 $120 $120 $100 $100 1 4 5 2 3 Years A A i 1 1 0 1 1 1 2 3 Years 4 5 Homework Nbre 1 Exercise 1 a- John deposit $5,000 in a savings account that earns 8% simple interest per year. What is the minimum number of years he must wait to double your balance? b- Suppose instead that he deposit the $5,000 in another savings account that earns 7% interest compounded yearly. How many years will it take now to double his balance? Exercise 2 Suppose you have the alternative of receiving either $12,000 at the end of five years or P dollars today. Currently you have no need for money, so you would invest the P dollars in a project with a growth rate estimated to 5%. What value of P would make you indifferent in your choice between P dollars today and the promise of $12,000 at the end of five years? Exercise 3 What will be the amount accumulated by each of these present investments? (a) $5,000 in 8 years at 5% compounded annually (b) $2,250 in 12 years at 3% compounded annually Exercise 4 What is the present worth of these future payments? (a) $5,500 6 years from now at 10% compounded annually (b) $8,000 15 years from now at 6% compounded annually Exercise 5 For a growth rate of 13% compounded annually, find (a) How much can be lent now if $10,000 will be repaid at the end of five years? (b) How much will be required in four years to repay a $25,000 loan received now