Fin 3600 Eol 71 - Module 2 Homework
Essay by Khadajia Choyce • May 10, 2017 • Coursework • 318 Words (2 Pages) • 891 Views
Khadajia Choyce
FIN3600 EOL71
Module 2 Homework
Indiana Tech
April 13, 2017
P3-4 a-b
PV = FV / (1 + r) ^ n
A1. PV = 1,000,000 / (1 + 0.6) ^ 10
PV = 1,000,000 / 1.79085
PV = 558,394.05
A2. PV = 1,000,000 / (1 + 0.9) ^ 10
PV = 1,000,000 / 2.36736
PV = 422,411.46
A3. PV = 1,000,000 / (1 + 0.12) ^ 10
PV = 1,000,000 / 3.10585
PV = 321,973.05
B. 6% = 417,264.75
9% = 274,538.22
12% = 182,696.12
P3-12
FV₅ = PV x (1.07)⁵
FV₅ = 24,000 x (1.403)
FV₅ = 33,661
Beginning of Yr | No. of years (t) | FV=CF₁x(1+.07)^1 | Future value |
1 | 5 | 2000 x 1.403 | 2805.10 |
2 | 4 | 4000 x 1.311 | 5243.18 |
3 | 3 | 6000 x 1.225 | 7350.26 |
4 | 2 | 8000 x 1.1449 | 9159.20 |
5 | 1 | 10000 x 1.010 | 10700.00 |
Total = | 35257.74 |
Gina should choose the mixed stream alternative.
P3-17
Year | Expense | PVIF₈%, n | Present value |
1 | 5000 | 0.926 | 4630 |
2 | 4000 | 0.857 | 3428 |
3 | 6000 | 0.794 | 4764 |
4 | 10,000 | 0.735 | 7350 |
5 | 3000 | 0.681 | 2043 |
Total = | 22,215 |
A deposit of $22,215 would be needed to cover expenses.
P4-17 a-c
Bond A market price is $1220.80
Bond B market price is $659.92
Bond C market price is $957.88
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