Please help me with questions 1-18 , has to be in Excel

6.1. Future value with multiple cash flows: Konerko, Inc., expects to earn cash flows of $1 years. If the company uses an 8 percent discount rate, what is the future value of these xpects to earn cash flows of $13,227, $15,611, $18,970, and $19,114 over the next four at is the future value of these cash flows at the end of year 4? Future value with multiple cashflows. Ben Woolmer has an investment that will pa years: $2,350, $2,725, $3,128, $3,366 and $3,695. If his investments typically earn 7 6.2. investment's cash flows at the end of five years? as an investment that will pay him the following cash flows over the next five investments typically earn 7.65 percent, what is the future value of the 6.3. Future value with multiple cash flows: You are a freshman in college and are planni from college at the end of four years. You plan to save the following amounts annually, $750. If the account pays 5.75 percent annually, how much will you have at the end of n in college and are planning a trip to Europe when you graduate llowing amounts annually, starting today: $625, $700, $700, and will you have at the end of four years? 6.4. Present value with multiple cash flows: Saul Cervantes has just purchased some eq business. For this equipment he must pay the following amounts at the end of each of th $8,500, $9,675, $12,500, and $11,635. If the approriate discount rate is 10.875 percent, dollars of the equipment Saul purchased today? just purchased some equipment for his landscaping nts at the end of each of the next five years: $10,450, unt rate is 10.875 percent, what is the cost in today's 6.5. Present value with multiple cash flows: Jeremy Fenloch borrowed some money from repay him the amounts of $1,225, $1,350, $1,500, $1,600, and $1,600 over the next five discounts investment cash flows at 8 percent annually, how much did Jeremy borrow? h borrowed some money from his friend and promised to and $1,600 over the next five years. If the friend normally w much did Jeremy borrow? 6.6 Present value with multiple cash flows: Biogenesis Inc. management expects the following cash flow stream over the next five years. They discount all cash flows at a 2 percent discount rate. What is the present value of this cash flow stream? sis Inc. management expects the They discount all cash flows at a 23 his cash flow stream? 6.7. Present value of an ordinary annuity: An investment opportunity requires a payment o years, starting a year from today. If your required rate of return is 8 percent, what is the v investment to you today? ortunity requires a payment of $750 for 12 urn is 8 percent, what is the value of the 6.8. Present value of an ordinary annuity: Dynamics Telecommunications Corp. has m investment in another company that will guarantee it a cash flow of $22,500 each ye five years. If the company uses a discount rate of 15 percent on its investments, wha value of this investment? lecommunications Corp. has made an a cash flow of $22,500 each year for the next percent on its investments, what is the present 6.9. Future value of an ordinary annuity: Robert Hobbes plans to invest $25,000 a year a year for the next seven years in an investment that will pay him a rate of return of 11.4 money will Robert have at the end of seven years? nvest $25,000 a year at the end of each rate of return of 11.4 percent. How much 6.10. Future value of an ordinary annuity: Cecelia Thomas is a sales executive at a Ba years old and plans to invest $3,000 every year in an IRA account, beginning at the she turns 65 years old. If the IRA investment will earn 9.75 percent annually, how mu years, when she turns 65? les executive at a Baltimore firm. She is 25 unt, beginning at the end of this year until cent annually, how much will she have in 40 6.11 Future value of an annuity due: Refer to Problem 6.10. if Cecelia invests at the beginning of each year, how much will she have at age 65? 6.10. if Cecelia invests at the ge 65? 6.12 Computing annuity payment: Kevin Winthrop is saving for an Australian vacation in t need $5,000 to cover his airfare and all other expenses for a week-long holiday in Aust S&P 500 equity index fund that is expected to earn an average return of 10.3 percent o will he have to save every year if he starts saving the end of this year? g for an Australian vacation in three years. He estimates that he will or a week-long holiday in Australia. If he can invest his money in an verage return of 10.3 percent over the next three years, how much d of this year? 6.13 Computing annuity payment: The Elkridge Bar & Grill has a seven-year loan of $23,500 with Bank of America. It plans to repay the loan in seven equal installments starting today. If the rate of interest is 8.4 percent, how much will each payment be? ill has a seven-year loan of an in seven equal installments w much will each payment be? 6.14 Perpetuity: Your grandfather is retiring at the end of next year. He would like to ensu receive payments of $10,000 a year forever, starting when he retires. If he can earn 6 does your grandfather need to invest to produce the desired cash flow? year. He would like to ensure that his heirs n he retires. If he can earn 6.5 percent, how much ed cash flow? 6.15 Perpetuity: Calculate the annual cash flows for each of the following investments: a. $250,000 invested at 6 percent. b. $50,000 invested at 12 percent. c. $100,000 invested at 10 percent. of the following investments: 6.16. Effective annual rate: Raj Krishnan bought a Honda Civic for $17,345. He put down $6,000 and financed the rest through the dealer at an APR of 4.9 percent for four years. What is the effective annual rate (EAR) if the loan payments are made monthly? for $17,345. He put APR of 4.9 percent loan payments are 6.17. Effective annual rate: Cyclone Rentals borrowed $15,550 from a bank for three ye 6.75 percent, and the compounding is daily, what is the effective annual interest rate ,550 from a bank for three years. If the quoted rate (APR) is e effective annual interest rate (EAR)? 6.18. Growing perpetuity: You are evaluating a growing perpetuity investment from a lar payment of $20,000 at the end of this year and subsequent payments that will grow discount rate for investments like this, what is the present value of this growing perp perpetuity investment from a large financial services firm. The investment promises an initial sequent payments that will grow at a rate of 3.4 percent annually. If you use a 9 percent resent value of this growing perpetuity? 6.19. Future value with multiple cash flows: Trigen Corp. management will invest cash f $331,000, $616,450, $212,775, $818,400, $1,239,644, and $1,617,848 in research an development over the next six years. If the appropriate interest rate is 6.75 percent, w the future value of these investment cash flows six years from today? management will invest cash flows of and $1,617,848 in research and interest rate is 6.75 percent, what is rs from today? 6.20. Future value with multiple cash flows: Stephanie Watson plans to make the investments beginning next year. She will invest $3,125 in each of the next thr will then make investments of $3,650, $3,725, $3,875, and $4,000 over the fol years. If the investments are expected to earn 11.5 percent annually, how muc Stephanie have at the end of the seven years? ie Watson plans to make the following 3,125 in each of the next three years and 875, and $4,000 over the following four 5 percent annually, how much will 6.21. Present value with multiple cash flows: Carol Jenkins, a lottery winner, w following payments over the next seven years. If she can invest her cash flow earn 10.5 percent annually, what is the present value of her winnings? Jenkins, a lottery winner, will receive the she can invest her cash flows in a fund that will alue of her winnings? 6.22. Computing annuity payment: Gary Whitmore is a high school sophomore. He cur has $7,500 in a savings account that pays 5.65 percent annually. Gary plans to use current savings plus what he can save over the next four years to buy a car. He est that the car will cost $12,000 in four years. How much money should Gary save eac if he wants to buy the car? chool sophomore. He currently nnually. Gary plans to use his years to buy a car. He estimates ney should Gary save each year 6.23. Growing annuity: Modern Energy Company owns several gas stations. Management open a new station in the western suburbs of Baltimore. One possibility that managers a company are evaluating is to take over a station located at a site that has been leased f county. The lease, originally for 99 years, currently has 73 years before expiration. The g generated a net cash flow of $92,500 last year, and the current owners expect an annua of 6.3 percent. If Modern Energy uses a discount rate of 14.5 percent to evaluate such b what is the present value of this growing annuity? gas stations. Management is looking to e possibility that managers at the site that has been leased from the ears before expiration. The gas station ent owners expect an annual growth rate 5 percent to evaluate such businesses, 6.24. Future value of an annuity due: Jeremy Denham plans to save $5,000 every year starting today. At the end of eight years, Jeremy will turn 30 years old and plans to down payment on a house. If his investment in a mutual fund will earn him 10.3 per he have saved in eight years when he buys his house? ns to save $5,000 every year for the next eight years, rn 30 years old and plans to use his savings toward the al fund will earn him 10.3 percent annually, how much will ? 6.25. Present value of an annuity due: Grant Productions has borrowed a huge sum fro of 17.5 percent for a seven-year period. The loan calls for a payment of $1,540,862 did Grant borrow? s has borrowed a huge sum from the California Finance Company at a rate s for a payment of $1,540,862.19 each year beginning today. How much 6.26. Present value of an annuity due: Sharon Kabana has won a state lottery and will every year, starting today, for the next 20 years. If she normally invests at a rate of 7 value of the cash flows that she will receive? Round to the nearest dollar. n a state lottery and will receive a payment of $89,729.45 mally invests at a rate of 7.25 percent, what is the present nearest dollar. 6.27 Present value of an annuity due: You wrote a piece of software that does a better job of to network than any other program designed for this purpose. A large networking compan your software into its systems and is offering to pay you $500,000 today, plus $500,000 at the following six years, for permission to do this. If the appropriate interest rate is 6 percen value of the cash flow stream that the company is offering you? that does a better job of allowing computers arge networking company wants to incorporate today, plus $500,000 at the end of each of e interest rate is 6 percent, what is the present 6.28 Present Vlaue of an annuity: Suppose that the networking company in Problem 6 you until the first of the new systems that use your software are sold in two years. W that annuity? Assume the appropriate interest rate is still 6 percent. g company in Problem 6.27 will not start paying are sold in two years. What is the present value of percent. 6.29 Perpetuity: Calculate the present value of the following perpetuities: a. $1,250 discounted back to the present at 7 percent. b. $7,250 discounted back to the present at 6.33 percent. c. $850 discounted back to the present at 20 percent. 6.30. Effective annual interest rate: Find the effective annual interest rate (EAR) for each o a. 6 percent compounded quarterly. b. 4.99 percent compounded monthly. c. 7.25 percent compounded semiannually. d. 5.6 percent compounded daily. st rate (EAR) for each of the following: 6.31. Effective annual interest rate: Which of the following investments has the highest effective annual interest rate (EAR)? A a.bank CD that pays 8.25 percent interest quarterly. A b.bank CD that pays 8.25 percent monthly. A c.bank CD that pays 8.45 percent annually. A d.bank CD that pays 8.25 percent semiannually. A e.bank CD that pays 8 percent daily (on a 365-day basis). g investments has 6.32. Effective annual interest rate: You are considering three alternative investments: (1) a three-year bank CD paying 7.5 percent compounded quarterly; (2) a three-year bank CD paying 7.3 percent compounded monthly; and (3) a three-year bank CD paying 7.75 percent compounded annually. Which investment has the highest effective annual interest rate (EAR)? native investments: terly; hly; and ually. (EAR)? 6.33 You have been offered the opportunity to invest in a project which is exected to provi cash flows: $4,000 in 1 year, $12,000 in 2 years, and $8,000 in 3 years. If the appropria percent for the first year, 8 percent for the second year, and 12 percent for the third ye of these cash flows? ct which is exected to provide you with the following 0 in 3 years. If the appropriate interest rates are 6 nd 12 percent for the third year, what is the present value 6.34. Tirade Owens, a professional athlete, currently has a contract that will pay him a lar the first year of his contract and smaller amounts thereafter. He and his agent have to restructure the contract. The team, though reluctant, obliged. Tirade and his age a counteroffer. What are the present values of each of the contracts using a 14 perc rate? Which of the three contacts has the highest present value? act that will pay him a large amount in . He and his agent have asked the team iged. Tirade and his agent came up with contracts using a 14 percent discount alue? 6.35. Gary Kornig will be 30 years old next year and wants to retire when he is 65. So far account in which his money is earning 8.3 percent annually and (2) $5,000 in a mo 5.25 percent annually.. Gary wants to have $1 million when he retires. Starting nex of money, every year until he reitres, in a mutual fund in which he expects to earn 9 have to invest every year to achieve his savings goal? to retire when he is 65. So far he has saved (1) $6,950 in an IRA nnually and (2) $5,000 in a money market account in which he is earning when he retires. Starting next year, he plans to invest the same amount d in which he expects to earn 9 percent annually. How much will Gary ? 6.36 The top prize for the state lottery is $100,000,000. You have decided it is time for you purchase a ticket. Before you purchase the ticket, you must decide whether to choos the annual payment option. If you choose the annual payment option and win, you w in 25 equal payments of $4,000,000 - one payment today and one payment at the end years. If you choose the cash payment, you will receive a one-time lump sum payme you can invest the proceeds and earn 6 percent, which option should you choose? decided it is time for you to take a chance and t decide whether to choose the cash option or ent option and win, you will receive $100,000,000 d one payment at the end of each of the next 24 ne-time lump sum payment of $59,194,567.18. If on should you choose? 6.37 At what interest rate would you be indifferent between the cash and annual payment o 6.36 The top prize for the state lottery is $100,000,000. You have decided it is time for you ticket. Before you purchase the ticket, you must decide whether to choose the cash o option. If you choose the annual payment option and win, you will receive $100,000,0 $4,000,000 - one payment today and one payment at the end of each of the next 24 ye payment, you will receive a one-time lump sum payment of $59,194,567.18. If you can percent, which option should you choose? and annual payment options in Problem 6.36? cided it is time for you to take a chance and purchase a er to choose the cash option or the annual payment will receive $100,000,000 in 25 equal payments of each of the next 24 years. If you choose the cash 194,567.18. If you can invest the proceeds and earn 6 6.38. Babu Baradwaj is saving for his son's college tuition. His son is currently 11 years old a investment of $7,500 that is earning 9.5 percent annually. Total expenses at the Univers total $15,000 per year, but are expected to grow at roughly 6 percent each year. Babu p to make up the difference between the college expenses and his current savings. In tota today and with the last being made a year before his son begins college. a. What will be the present value of the four years of college expenses just when the son starts college? Assume a discount rate of 5.5 percent. b. What will be the value of the index mutual fund when the son just starts college? c. What is the amount that the father has to have saved when his son turns 18? d. How much will the father have to invest every year in order for him to have enough funds to cover all tuition expenses? ion. His son is currently 11 years old and will begin college in seven years. Babu has an index fund annually. Total expenses at the University in Maryland, where his son says he plans to go, currently at roughly 6 percent each year. Babu plans to invest in a mutual fund that will earn 11 percent annually xpenses and his current savings. In total, Babu will make seven equal investments with the first starting his son begins college. f college expenses just rate of 5.5 percent. hen the son just starts college? aved when his son turns 18? ar in order for him to have Babu has an index fund he plans to go, currently ill earn 11 percent annually tments with the first starting 6.39. You are now 50 years old and plan to retire at age 65. You currently have a stock portfo 401(k) retirement plan worth $250,000, and a money market account worth $50,000. Y expected to provide you annual returns of 12 percent, your 401(k) investment will earn and the money market account earns 5.25 percent, compounded monthly. age 65. You currently have a stock portfolio worth $150,000, a money market account worth $50,000. Your stock portfolio is percent, your 401(k) investment will earn you 9.5 percent annually, cent, compounded monthly. 6.40. Trevor Diaz is looking to purchase a Mercedes Benz SL600 Roadster, which has an invoice price of $121,737 and a total cost of $129,482. Trevor plans to put down $20,000 and will pay the rest by taking on a 5.75 percent five-year loan. What is the monthly payment on this auto loan? Prepare an amortization table using Excel. 0 Roadster, which 482. Trevor plans to percent five-year pare an 6.41. The Sundarams are buying a new 3,500-square-foot house in Muncie, Indiana, and w $237,000 from Bank One at a rate of 6.375 percent for 15 years. What is their monthl payment? Prepare an amortization schedule using Excel. e in Muncie, Indiana, and will borrow years. What is their monthly loan 6.42. Assume you will start working as soon as you graduate from college. You plan to sta your 25th birthday and retire on your 65th birthday. After retirement, you expect to liv wish to be able to withdraw $40,000 (in today's dollars) every year from the time of y years old (i.e., for 20 years). You can invest, starting when you turn 25 years old, in a inflation rate is likely to be 5 percent. om college. You plan to start saving for your retirement. on retirement, you expect to live at least until you are 85. You very year from the time of your retirement until you are 85 n you turn 25 years old, in a portfolio fund. The average STP #6.1. Freisinger, Inc., is expecting a new project to start paying off, beginnin end of next year. It expects cash flows to be as follows: ect to start paying off, beginning at the o be as follows: STP#6.2 Compare an annuity due with an ordinary annuity. The payments for both are made annually and are of the same dollar amounts. The two annuities also have the same duration in years and the same discount rate. Which of the following statements is/a correct? a. The present value of the ordinary annuity is greater. b. The present value of the annuity due is greater. c. The future value of the ordinary annuity is greater. d. The future value of the annuity due is greater. he payments for both are made wo annuities also have the same of the following statements is/are STP#6.3 You plan to set up an endowment at your Alma Mater which will fund $200,000 of scholarships each year indefinitely. If the principal (the amount you donate) can be invested at 5.5 percent, compounded annually, how much do you need to donate to university today, so that the first scholarships can be awarded one year from now? r which will fund $200,000 of e amount you donate) can be much do you need to donate to the awarded one year from now? STP#6.4 Annalise Genric wants to open a restaurant in a historic building. The property can leased for 20 years, but not purchased. She believes her restaurant can generate a cash flow of $76,000 the first year and expects an annual growth rate of 4 percent thereafter. If a discount rate of 15 percent is used to evaluate this business, what is present value of the cash flows that it will generate? building. The property can be er restaurant can generate a net al growth rate of 4 percent aluate this business, what is the STP#6.5 A credit card offers financing at an APR of 18 percent, with monthly compounding o charges. What is the effective annual rate (EAR)? 8 percent, with monthly compounding on outstanding AR)? \f\f