Finance

FINC540

Assignment2
To
Dr. Saad Metawa

Assignment no.1

Page 1

Presented by
Marwa Elnashar
#800112790#

Assignment no.1

Page 2

(4-1)
FV=10,000*(1.1^5)= 16,105.1

(4-2)
5,000=x*(1.07^20)
X=5,000/(1.07^20)
=1,292.1

(4-3)
1,000,000=250,000*(x^18)
(x^18)=1,000,000/250,000=4
18Logx=Log4
Logx=Log4/18
X=10^(Log4/18)=1.08
The interest = 8%

(4-4)
2x=x*(1.065^n)
nLog(1.065)=Log2
n=Log2/Log1.065=11years

(4-8)
The monthly loan payment

= (0.01*20,000*(1.01^60)) / ((1.01^60)-1) =444.889

Assignment no.1

Page 3

EAR = (1.01^12)-1
=12.68%

(4-20)
(a)
year
1
2
3
4
5

payment
6,594.94
6,594.94
6,594.94
6,594.94
6,594.93
32,974.69

interest Repayment of principal Remaining Balance

2,500
4,094.94
20,905.01
2,090.51
4,504.43
16,400.63
1,640.06
4,954.88
11,445.75
1,144.58
5,450.36
5,995.39
599.54
5,995.39
0.00
7,974.69
25,000

(b)

The payment will be 13,189.87

(c)
The monthly loan payment

= 8,137.27
Because the payment will be in longer time, so more interest will be applied.

Assignment no.1

Page 4