PowerPoint Chapter 6 If you deposit $100 at the end of year one, $200 at the end of year two, how much do you have at the end of year two using a 5% interest rate. 0 1 2 T2 T1 0 100 200 305 105 200 Time Time CF FV 0 481.5927874 You are offered an investment that will pay 100 in year 1, $200 the next year, and $300 the following year. What is the most you should pay if the discount rate is 10%? Round Time 0 1 2 3 TI T2 T3 Time CF 100 200 300 DCF 90.90909091 165.2892562 225.3944403 PV I/Y N FV PMT ($587.13) Suppose you want to borrow $25,000 for a new car. You can borrow at 6% per year, compounded monthly (6/12 = 0.05% per month). If you take a 4 ye 25,000 0.005 48 L T 0 ? 5% 2 divide by 12 multiply by 12 Investment eds

(6/12=0.05%