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TIME VALUE OF MONEY Answer the following questions: Assuming a rate of 1 0 % annually, find the FV of $ 1 , 0 0
TIME VALUE OF MONEY Answer the following questions: Assuming a rate of annually, find the FV of $ after years. What is the investments FV at rates of and after and years? Find the PV of $ due in years if the discount rate is What is the rate of return on a security that costs $ and returns $ after years? Suppose Californias population is million people and its population is expected to grow by annually. How long will it take for the population to double? Find the PV of an ordinary annuity that pays $ each of the next years if the interest rate is What is the annuitys FV How will the PV and FV of the annuity in part f change if it is an annuity due? What will the FV and the PV be for $ due in years if the interest rate is semiannual compounding? What will the annual payments be for an ordinary annuity for years with a PV of $ if the interest rate is What will the payments be if this is an annuity due? Find the PV and the FV of an investment that pays annually and makes the following endofyear payments: Details Five banks offer nominal rates of on deposits; but A pays interest annually; B pays semiannually; C pays quarterly; D pays monthly; and E pays daily. What effective annual rate does each bank pay? If you deposit $ in each bank today, how much will you have in each bank at the end of year? years? If all of the banks are insured by the government the FDIC and thus are equally risky, will they be equally able to attract funds? If not and the TVM is the only consideration what nominal rate will cause all of the banks to provide the same effective annual rate as Bank A Suppose you dont have the $ but need it at the end of year. You plan to make a series of depositsannually for A semiannually for B quarterly for C monthly for D and daily for Ewith payments beginning today. How large must the payments be to each bank? Even if the five banks provided the same effective annual rate, would a rational investor be indifferent between the banks? Explain. Suppose you borrow $ The loans annual interest rate is and it requires four equal endofyear payments. Set up an amortization schedule that shows the annual payments, interest payments, principal repayments, and beginning and ending loan balances.
TIME VALUE OF MONEY Answer the following questions:
Assuming a rate of annually, find the FV of $ after years.
What is the investments FV at rates of and after and years?
Find the PV of $ due in years if the discount rate is
What is the rate of return on a security that costs $ and returns $ after years?
Suppose Californias population is million people and its population is expected to grow by annually. How long will it take for the population to double?
Find the PV of an ordinary annuity that pays $ each of the next years if the interest rate is What is the annuitys FV
How will the PV and FV of the annuity in part f change if it is an annuity due?
What will the FV and the PV be for $ due in years if the interest rate is semiannual compounding?
What will the annual payments be for an ordinary annuity for years with a PV of $ if the interest rate is What will the payments be if this is an annuity due?
Find the PV and the FV of an investment that pays annually and makes the following endofyear payments:
Details
Five banks offer nominal rates of on deposits; but A pays interest annually; B pays semiannually; C pays quarterly; D pays monthly; and E pays daily.
What effective annual rate does each bank pay? If you deposit $ in each bank today, how much will you have in each bank at the end of year? years?
If all of the banks are insured by the government the FDIC and thus are equally risky, will they be equally able to attract funds? If not and the TVM is the only consideration what nominal rate will cause all of the banks to provide the same effective annual rate as Bank A
Suppose you dont have the $ but need it at the end of year. You plan to make a series of depositsannually for A semiannually for B quarterly for C monthly for D and daily for Ewith payments beginning today. How large must the payments be to each bank?
Even if the five banks provided the same effective annual rate, would a rational investor be indifferent between the banks? Explain.
Suppose you borrow $ The loans annual interest rate is and it requires four equal endofyear payments. Set up an amortization schedule that shows the annual payments, interest payments, principal repayments, and beginning and ending loan balances.
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