1. Val Hawkins borrowed $15,000 at a 14 percent annual rate of interest to be repaid over 3 years.

The loan is amortized into three equal annual end-of-year payments. a. Calculate the annual end-of-year loan payment b. Prepare a loan amortization schedule showing the interest and principal breakdown of each of the three loan payments. c. Explain why the interest portion of each payment declines with the passage of time.

2. Consider the project with the following expected cash flows: Yea r Cash flow 0 $200,000 1 +50,000 2 +50,000 + 3 $200,000 If the discount rate is 0%, what is the project's net present discount rate is 5%, what is the project's net present is this project's internal rate of return? reinvestment rate is 5%, what is this project's modified of return?

a. value? b. If the value? c. What d. If the internal rate

3. Consider a project with the expected cash flows: Yea r 0 1 2 3 Cash flow -$50,000 +50,000 +100,00 0 $100,00 0

A What is this project's internal rate of return? B If the discount rate is 5%, what is this project's net present value?

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4. A project requiring a $1 million investment has a profitability index of 0.96. What is its net present value? Alan invested $10,000 for five years at an interest rate of 7.5% compounded quarterly calculate total amount at end of the five years.