Suppose you are a loan officer for a bank. A start-up company has qualified for a loan. You are pondering various proposals for repayment: (Click the icon to view the present value factor table.) (Click the icon to view the present value annuity factor table.) Read the requirements Requirement 1. Lump sum $600,000 four years hence. How much will you lend if your required rate of retum is (a) 8%, compounded annually, and (b) 12%, compounded annually? (Round your final answers to the nearest whole amount) Begin by selecting the formula you will need to answer this question for each of the two scenarios (a. and b.) Present value 1a. Assume that your required rate of return is 5%, compounded annually. 1b. Assume that your required rate of return is 12%, compounded annually Requirement 2. Repeat number 1, but assume that the interest rates are compounded semiannually. Begin by selecting the formula you will need to answer this question for each of the two scenarios (a. and b.) = Prosent value 2a. Assume that your required rate of return is 6%, compounded semiannually, $ 26. Assume that your required rate of return is 12%, compounded semiannually Requirement 3. Suppose the loan is to be paid in full by equal payments of $150,000 at the end of each of the next 4 years. How much will you lend if your required rate of return is (a) 8%, compounded annually, and (b) 12%, compounded annually? Begin by selecting the formula you will need to answer this question for each of the two scenarios (a. and b.) Present value 3a. Assume that your required rate of return is 8%, compounded annually. $ 3b. Assume that your required rate of return is 12%, compounded annually. $ Present Value of $1 Period 3% 4% 5% 6% 7% 8% 10% 12% 14% 16% 18% 20% 1 .9709 .9615 .9524 .9434 .9346 .9259 .9091 .8929 .8772 .8621 .8475 .8333 2 .9426 .9246 .9070 .8900 .8734 .8573 .8264 .7972 ..7695 7432 .7182 .6944 3 .9151 .8890 .8638 .8396 .8163 .7938 .7513 .7118 .6750 .6407 .6086 .5787 4 .8885 .8548 .8227 .7921 .7629 .7350 .6830 .6355 .5921 .5523 .5158 .4823 5 .8626 .8219 .7835 .7473 .7130 .6806 .6209 .5674 .5194 4761 4371 .4019 .8375 7903 .7462 .7050 .666 .630 .564 .5066 .4556 4104 .3704 .3349 7 .8131 .7599 .7107 .6651 .6227 .5835 .5132 .4523 .3996 3538 .3139 .2791 8 .7894 .7307 .6768 .6274 .5820 .5403 4665 4039 .3506 3050 .2660 .2326 9 .7664 .7026 .6446 .5919 .5439 .5002 4241 .3606 .3075 2630 .2255 .1938 10 .7441 .6756 .6139 .5584 .5083 4632 .3855 .3220 .2697 2267 .1911 .1615 15 .6419 .5553 .4810 .4173 .3624 .3152 .2394 .1827 .1401 1079 .0835 .0649 20 .5537 4564 .3769 .3118 .2584 .2145 .1486 .1037 .0728 .0514 .0365 .0261 25 4776 .3751 .2953 .2330 .1842 .1460 .0923 .0588 .0378 .0245 .0160 .0105 30 .4120 .3083 .2314 . 1741 .1314 .0994 .0573 .0334 .0196 .0116 .0070 .0042 Present Value of Ordinary Annuity of $1 Period 3% 4% 5% 6% 7% 8% 10% 12% 14% 16% 18% 20% 1 .9709 .9615 .9524 .9434 .9346 .9259 .9091 .8929 .8772 .8621 .8475 .8333 2 1.9135 1.8861 1.8594 1.8334 1.8080 1.7833 1.7355 1.6901 1.6467 1.6052 1.5656 1.5278 3 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.4869 2.4018 2.3216 2.2459 2.1743 2.1065 4 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.1699 3.0373 2.9137 2.7982 2.6901 2.5887 01 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.7908 3.6048 3.4331 3.2743 3.1272 2.9906 6 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.3553 4.1114 3.8887 3.6847 3.4976 3.3255 7 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 4.8684 4.5638 4.2883 4.0386 3.8115 3.6046 8 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.3349 4.9676 4.6389 4.3436 4.0776 3.8372 9 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.7590 5.3282 4.9464 4.6065 4.3030 4.0310 10 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.1446 5.6502 5.2161 4.8332 4.4941 4.1925 15 11.9379 11.1184 10.3797 9.7122 9.1079 8.5595 7.6061 6.8109 6.1422 5.5755 5.0916 4.6755 20 14.8775 13.5903 12.4622 11.4699 10.5940 9.8181 8.5136 7.4694 6.6231 5.9288 5.3527 4.8696 25 17.4131 15.6221 14.0939 12.7834 11.6536 10.6748 9.0770 7.8431 6.87296.0971 5.4669 4.9476 30 19.6004 17.2920 15.3725 13.7648 12.4090 11.2578 9.4269 8.0552 7.0027 6.1772 5.5168 4.9789 Suppose you are a loan officer for a bank. A start-up company has qualified for a loan. You are pondering various proposals for repayment: (Click the icon to view the present value factor table.) (Click the icon to view the present value annuity factor table.) Read the requirements Requirement 1. Lump sum $600,000 four years hence. How much will you lend if your required rate of retum is (a) 8%, compounded annually, and (b) 12%, compounded annually? (Round your final answers to the nearest whole amount) Begin by selecting the formula you will need to answer this question for each of the two scenarios (a. and b.) Present value 1a. Assume that your required rate of return is 5%, compounded annually. 1b. Assume that your required rate of return is 12%, compounded annually Requirement 2. Repeat number 1, but assume that the interest rates are compounded semiannually. Begin by selecting the formula you will need to answer this question for each of the two scenarios (a. and b.) = Prosent value 2a. Assume that your required rate of return is 6%, compounded semiannually, $ 26. Assume that your required rate of return is 12%, compounded semiannually Requirement 3. Suppose the loan is to be paid in full by equal payments of $150,000 at the end of each of the next 4 years. How much will you lend if your required rate of return is (a) 8%, compounded annually, and (b) 12%, compounded annually? Begin by selecting the formula you will need to answer this question for each of the two scenarios (a. and b.) Present value 3a. Assume that your required rate of return is 8%, compounded annually. $ 3b. Assume that your required rate of return is 12%, compounded annually. $ Present Value of $1 Period 3% 4% 5% 6% 7% 8% 10% 12% 14% 16% 18% 20% 1 .9709 .9615 .9524 .9434 .9346 .9259 .9091 .8929 .8772 .8621 .8475 .8333 2 .9426 .9246 .9070 .8900 .8734 .8573 .8264 .7972 ..7695 7432 .7182 .6944 3 .9151 .8890 .8638 .8396 .8163 .7938 .7513 .7118 .6750 .6407 .6086 .5787 4 .8885 .8548 .8227 .7921 .7629 .7350 .6830 .6355 .5921 .5523 .5158 .4823 5 .8626 .8219 .7835 .7473 .7130 .6806 .6209 .5674 .5194 4761 4371 .4019 .8375 7903 .7462 .7050 .666 .630 .564 .5066 .4556 4104 .3704 .3349 7 .8131 .7599 .7107 .6651 .6227 .5835 .5132 .4523 .3996 3538 .3139 .2791 8 .7894 .7307 .6768 .6274 .5820 .5403 4665 4039 .3506 3050 .2660 .2326 9 .7664 .7026 .6446 .5919 .5439 .5002 4241 .3606 .3075 2630 .2255 .1938 10 .7441 .6756 .6139 .5584 .5083 4632 .3855 .3220 .2697 2267 .1911 .1615 15 .6419 .5553 .4810 .4173 .3624 .3152 .2394 .1827 .1401 1079 .0835 .0649 20 .5537 4564 .3769 .3118 .2584 .2145 .1486 .1037 .0728 .0514 .0365 .0261 25 4776 .3751 .2953 .2330 .1842 .1460 .0923 .0588 .0378 .0245 .0160 .0105 30 .4120 .3083 .2314 . 1741 .1314 .0994 .0573 .0334 .0196 .0116 .0070 .0042 Present Value of Ordinary Annuity of $1 Period 3% 4% 5% 6% 7% 8% 10% 12% 14% 16% 18% 20% 1 .9709 .9615 .9524 .9434 .9346 .9259 .9091 .8929 .8772 .8621 .8475 .8333 2 1.9135 1.8861 1.8594 1.8334 1.8080 1.7833 1.7355 1.6901 1.6467 1.6052 1.5656 1.5278 3 2.8286 2.7751 2.7232 2.6730 2.6243 2.5771 2.4869 2.4018 2.3216 2.2459 2.1743 2.1065 4 3.7171 3.6299 3.5460 3.4651 3.3872 3.3121 3.1699 3.0373 2.9137 2.7982 2.6901 2.5887 01 4.5797 4.4518 4.3295 4.2124 4.1002 3.9927 3.7908 3.6048 3.4331 3.2743 3.1272 2.9906 6 5.4172 5.2421 5.0757 4.9173 4.7665 4.6229 4.3553 4.1114 3.8887 3.6847 3.4976 3.3255 7 6.2303 6.0021 5.7864 5.5824 5.3893 5.2064 4.8684 4.5638 4.2883 4.0386 3.8115 3.6046 8 7.0197 6.7327 6.4632 6.2098 5.9713 5.7466 5.3349 4.9676 4.6389 4.3436 4.0776 3.8372 9 7.7861 7.4353 7.1078 6.8017 6.5152 6.2469 5.7590 5.3282 4.9464 4.6065 4.3030 4.0310 10 8.5302 8.1109 7.7217 7.3601 7.0236 6.7101 6.1446 5.6502 5.2161 4.8332 4.4941 4.1925 15 11.9379 11.1184 10.3797 9.7122 9.1079 8.5595 7.6061 6.8109 6.1422 5.5755 5.0916 4.6755 20 14.8775 13.5903 12.4622 11.4699 10.5940 9.8181 8.5136 7.4694 6.6231 5.9288 5.3527 4.8696 25 17.4131 15.6221 14.0939 12.7834 11.6536 10.6748 9.0770 7.8431 6.87296.0971 5.4669 4.9476 30 19.6004 17.2920 15.3725 13.7648 12.4090 11.2578 9.4269 8.0552 7.0027 6.1772 5.5168 4.9789