Use a calculator to solve all quantitative problems, and be sure to show calculator format!!!
(n, I, pmt, pv, fv CFo,I,CF1, CF2â¦.)
8) Three years ago a company had sales of $300,000. Now sales are $1,000,000. At what rate have
sales been growing?
9) Define each of the following:
a) Quoted rate (APR)
b) Periodic rate
c) Effective annual rate (EAR)
10) What are the following Effective Annual Rates (EAR) for 12%:
a) Compounded semiannually?
b) Compounded quarterly?
c) Compounded daily?
11) What would the value of $500 be after 4 years, assuming a return of 8% per year:
a) with semiannual compounding?
b) with quarterly compounding?
12)A. You plan to invest in a preferred stock issue that pays a $60 dividend at the end of each year. Based
on market conditions, you want to get a 5% return. What are you willing to pay for this security?
12)A You want to buy a car today!! The used car you are looking at costs $21,500. The car dealer will
charge you 5% interest on the three year car loan you need. You will be borrowing the whole $21,500. What will your car payment be, if you will make monthly payments?
13. Your company has invested $2500 in a vending machine today. You expect the machine to last 10 years and to produce the following after tax cash flows per year:
Year 1 $100
Year2 $250
Year 3 $250
Year 4 $300
Year 5 $300
Year 6 $300
Year 7 $300
Year 8 $300
Year 9 $350
Year 10 $350
If you have a required return on your investment of 7%, did you pay too much for the vending machine?
Use a calculator to solve all quantitative problems, and be sure to show calculator format!!!
(n, I, pmt, pv, fv CFo,I,CF1, CF2â¦.)
8) Three years ago a company had sales of $300,000. Now sales are $1,000,000. At what rate have
sales been growing?
9) Define each of the following:
a) Quoted rate (APR)
b) Periodic rate
c) Effective annual rate (EAR)
10) What are the following Effective Annual Rates (EAR) for 12%:
a) Compounded semiannually?
b) Compounded quarterly?
c) Compounded daily?
11) What would the value of $500 be after 4 years, assuming a return of 8% per year:
a) with semiannual compounding?
b) with quarterly compounding?
12)A. You plan to invest in a preferred stock issue that pays a $60 dividend at the end of each year. Based
on market conditions, you want to get a 5% return. What are you willing to pay for this security?
12)A You want to buy a car today!! The used car you are looking at costs $21,500. The car dealer will
charge you 5% interest on the three year car loan you need. You will be borrowing the whole $21,500. What will your car payment be, if you will make monthly payments?
13. Your company has invested $2500 in a vending machine today. You expect the machine to last 10 years and to produce the following after tax cash flows per year:
Year 1 $100
Year2 $250
Year 3 $250
Year 4 $300
Year 5 $300
Year 6 $300
Year 7 $300
Year 8 $300
Year 9 $350
Year 10 $350
If you have a required return on your investment of 7%, did you pay too much for the vending machine?
Related questions
**Please show your work.
1) Phil can afford $160 a month for 5 years for a car loan. If the interest rate is 4.4 percent compounded monthly, how much can he afford to borrow to purchase a car?
| $7,707.28 | |
| $8,448.00 | |
| $8,603.27 | |
| $8,775.33 | |
| $9,600.00 |
2) Atlas Insurance wants to sell you an annuity which will pay you $550 per quarter for 25 years. You want to earn a minimum rate of return of 5.0 percent compounded quarterly. What is the most you are willing to pay as a lump sum today to buy this annuity?
rev: 10_28_2013_QC_37913
| $28,778.49 | |
| $31,295.74 | |
| $31,006.68 | |
| $30,319.28 | |
| $29,735.24 |
3) What is the present value of $14,150 to be received 3 years from today if the discount rate is 5.75 percent?
| $11,846.79 | |
| $11,845.42 | |
| $11,965.07 | |
| $7,382.61 | |
| $12,653.06 |
4) The interest rate expressed as if it were compounded once per year is called the _____ rate.
| stated interest | |
| compound interest | |
| effective annual | |
| periodic interest | |
| daily interest |
5) Wicker Imports established a trust fund that provides $171,700 in scholarships each year for needy students. The trust fund earns a 4.00 percent rate of return. How much money did the firm contribute to the fund assuming that only the interest income is distributed?
| $4,039,757.60 | |
| $4,292,500.00 | |
| $3,434,000.00 | |
| $6,868,000.00 | |
| $5,151,000.00 |
