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ASSIGNMENT 2 (TVM Compounding) Using MS Excel complete the problems: Problems. 1. If a dad wants to have $100,000.00 to send his newborn son to college, how much must he invest annually for 18 years, if he can earn 9.50% on his savings? 1. 3. Verne Ingambar 2. A business has two possible investments (A&B belowl with each costing $4,000.00. If the IP business can earn 71/4% on other investments, which investment should be made? Annuity PV Years Lamp sump $ 1,500 $ 1,400 present value $ 1,500 $ 1,700 $ 1,500 $ 1,800 3. You won a raffle and are offered $900.00 after 5 years or $150.00 each year for 5 years. (1) If interest rates are 6% which offer should you accept? (2) What if interest rates were 14% which choice would you make? 4. A 5 year $100,000.00 term loan has an interest rate of 7% on a declining balance. (1) What are the equal annual payments need to fully amortize the loan? (2) Construct an Amortization Schedule showing the annual payment, interest payment, principle payment and loan balance each year. 5. In 2011, a stock was trading for $25.00/sh. Today (2018) that same stock is trading for $62,50/sh. If you purchased the stock in 2007, what would have been your rate of return? 6. You can save $1,500.00 each year in a saving account that pays 4% interest. How much will you have in 5 years: (1) IF interest was compounded (a) annual. (b) semi-annually and (c) quarterly 4 375 (2) What is the APR in each compounding frequency? Hint: The $1,000.00 must be divided accordingly