Question
To complete the problems below, You MUST: a. Draw a time line using Word with question(s) marks and all the relevant data. b. Write the
To complete the problems below, You MUST:
a. Draw a time line using Word with question(s) marks and all the relevant data.
b. Write the identity of the type of TVM problem you are looking at. Use the following identifications:
PVLS, PVA, FVLS, FVA, PVA Payments, or FVA Payments.
c. Show STEP-BY-STEP how you are calculating your answers using the format below. I will deduct points this step is not included (see below for format). To solve your problems you can use EXCEL to solve, BUT you must set up the problem using the format below
d. Label your factor from the Tables with the correct rate and time period (make sure your rate and period correspond to the time frame in the problem). See below.
10. Uncle Guido wants to give you a gift. He tells you he will write a check to you of $1500 in 1 year. $2,600 in year 2 and $3,000 in year 3. How much does Guido have to set aside now In order to have sufficient funds to write all of those checks? Assume a 10% rate. 11. You get a loan of $100,000 for 10 year term. If the payments are $1,801.85/month, what is the interest rate on this loan (remember all rates are always quoted as annual figures)? Hint set up timeline and determine which type of TVM problem it resembles. Then solve. 12. Carla will give $200 to you every three months for 10 years (4x per year). At year 10 she will also give $10,000 to you. What amount of money must be available in her bank account in order for her to have enough money to meet her promise. The rate is 12%. Hint: this problem is a combination of 2 types of TVM problems. Your final answer is the sum of the two. 13. Brett has contract that will pay him $10,000 at the end of 5 years. Brett wants money now and not in 5 years, so he is willing to have contract signed over to you (so you would receive that money) if you give him some money today. If you require a 12% interest rate on money you lend to friends. What is the maximum amount you would you be willing to pay for this contractStep by Step Solution
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