Problem 5.13

Dynamics Telecommunications Corp. has made an investment in another company that will guarantee it a cash flow of $26,000 each year for the next five years. If the company uses a discount rate of 20 percent on its investments, what is the present value of this investment?

Problem 5.16

The Elkridge Bar & Grill has a seven-year loan of $29,700 with Bank of America. It plans to repay the loan in seven equal installments starting today. If the rate of interest is 5.00 percent, how much will each payment be?

Problem 5.19

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 6.90 percent for four years. What is the effective annual interest rate (EAR) if the loan payments are made monthly?

Problem 5.23

Find the future value of an investment of $2,800 made today for the following rates and periods: a. 6.25 percent compounded semiannually for 12 years. b. 7.63 percent compounded quarterly for six years.

c. 8.9 percent compounded monthly for 10 years. d. 10 percent compounded daily for three years.

e. 8 percent compounded continuously for two years.

Problem 5.25

Samantha plans to invest some money so that she has $4,600 at the end of three years. How much should she invest today given the following choices? a. 4.2 percent compounded daily.

d. 5.4 percent compounded annually. b. 4.9 percent compounded monthly.

c. 5.2 percent compounded quarterly