questions 28-38

For frobiemr 28-3], assume you own a marmfa thmkmg about purchasing a labor-saving device a device will last 12 years and save yo { assume that the savings are realized at the e If 3'0\" b\"? the device. what is the total amount of labor costs you 28. / curring business and are u .SZJJO per month in labor costs will or! of the month}. -. ANSWERS Nome ___________.---'' to cost of$267,000. The Class _____'____---\""' I 28. __ save? ' i 29. Does having the answer to Problem 23 make it possible for you 10 29' / decide if you should buy the device? / l 30- Assuming that you need to earn 7.8% compounded monthly on your / money. what is value of the device? _'_/ F 31. Should you buy the device? --""/ 32. You have the chance to buy a promissory note in which you will receive 30- __________--"""'_ . 85 monthly payments of 3880. starting a month from now. If you buy f the note. what is the total amount you will receive? 31' ___--""'"_'_. ______--___- F5 33. Refer to Problem 32. If you want to earn 8% compounded monthly. what price should you Pay for the note? _.'--''"___' if ___________.__- 34. Four years ago you bought a 25-year 8.5% $1,000 bond. The bond pays a interest each 6 months. You want to sell the bond. You just received _________---"' F the 8'\" semiannual interest payment of $42.50 (51.000 x 4.25% periodic . rate = $42.50). Similar bonds are being issued that pay 6% 32- _________--' F semiannually. What is your bond worth today? F 33- ________-''_' F 35. Refer to Problem 34. Why is your bond worth more than the $1,000 M a face value? 35. ___________- a 36. Some bonds, referred to as zerocoupon bonds. pay no periodic interest; instead the bondholder buys the bond at a discount and receives the a maturity value on the maturity date. In effect, interest is received in one \""'"_'_ ' ' a lump-sum when the bond matures. Suppose a corporation issues '25- year $1,000 zero coupon bonds. Calculate the price you must pay for -'_ " ' a one of these bonds based on a prevailing 7% annual rate. no . ____-_'' a 37. You rent an apartment for $850 a month and offer to prepay 12 months a rent. If the landlord can earn 8.4% compounded monthly. what amount 36. should the landlord accept? (Remember, rent is always paid in advance, "'_ "' ' ' ,3 at the beginning of each month.) 37. . ' _ . '_. __ a 38. ______________- a x Challenge problems a 38. You invest $1,400 today in a savings plan earning 5.5% compounded quarterly. You then invest $100 each quarter (starting in 3 months). a What will your balance be at the end of '1 years? Chapter 1 2