A Rate 0.

06 C Rate
No of years 1 No of years
Present value 500 future value

Future value $530.00 present value

B Rate 0.06 d Rate

No of years 2 No of years
Present value 500 future value

Future value $561.80 present value

 0.06
No of years 1
future value 500

present value ($471.70)

0.06
No of years 1
future value 500

present value ($471.70)

A Rate 0.06 C
No of years 10
Present value 500

Future value $895.42

B Rate 0.12 D
No of years 10
Present value -500

Future value $1,552.92

Rate 0.06
No of years 10
future value 500

Present value ($279.20)

Rate 0.12
No of years 10
future value 500

Present value ($160.99)

A Present value 200 C Present value
Futuree value 400 Futuree value
rate 7% rate

N( years) 10.24477 N( years)

D Present value
B Present value 200 Futuree value
Futuree value 400 rate
rate 10%
N( years)
N( years) 7.272541
 200
400
18%

4.187835

200
400
100%

1
A rate 10% A
No of years 10
Present value 400

Future value ($6,374.97)

B rate 5% b
No of years 5
Present value 200

Future value ($1,105.13)

c
C rate 0%
No of years 5
Present value 400

Future value ($2,000.00)

Annuity due

rate 10%
No of years 10
Present value 400

Future value ($7,012.47)

rate 5%
No of years 5
Present value 200

Future value ($1,160.38)

rate 0%
No of years 5
Present value 400

Future value ($2,000.00)

 13-Apr

A
$400 per year for 10 years at 10%

present value of the following ordinary annuities

A Rate 10%
future value 400
years(N) 10

Present value ($2,457.83)

B Rate 5%
future value 200
years(N) 5

Present value ($865.90)

Rate 0%
future value 400
years(N) 5

Present value ($2,000.00)

D Rate 10%
future value 400
years(N) 10

Present value ($2,703.61)

Rate 5%
future value 200
years(N) 5

Present value ($909.19)

Rate 0%
future value 400
years(N) 5

Present value ($2,000.00)

14-a Rate 8%
A B
Data: 1 -100 -300
2 -400 -400
3 -400 -400
4 -400 -400
5 -300 -100

A stream Year1 Year2 Year 3

$92.59 $342.94 $317.53

B stream $277.78 $342.94 $317.53

14-b Rate 0%

A B
Data: 1 -100 -300
2 -400 -400
3 -400 -400
4 -400 -400
5 -300 -100

A stream Year1 Year2 Year 3

#VALUE! #VALUE! #VALUE!
Year4 Year5 Total
$294.01 $68.06 $1,115.13

$294.01 $68.06 $1,300.32

Year4 Year5 Total

#VALUE! #VALUE!
 Question 4-15

a)

borrow 700
pay back -749
Years 1

Rate 7%

b) lending -700
borrowing 749
Years 1

Rate 7%

c borrow 85000
pay back ($201,229)
Years 10
Rate 9%

borrow $9,000
pay back $2,684.80
Years 5

Rate -21%
Question 4.16

A Rate 12%
No of years 5
Present value 500

Future value $283.71

b Rate 12%
No of periods 10
Present value -500

Future value $160.99

C Rate 12%
No of times 20
Present value 500

Future value $4,823.15

D Rate 12%
No of times 60
Present value 500

Future value ($0.56)

Question 4.17

12% nominal rate, semiannual compounding, discounted back 5 years

A COMPUNDING Discounting
PV -500 Fv -500
R 6% R 6%
N 10 N 10

FV $895.42 pv $279.20

b COMPUNDING
PV -500 b Fv -500
R 3% R 3%
N 20 N 20

Fv $903.06 pv $276.84

c COMPUNDING c Fv -500
PV -500 R 1%
R 1% N 60
N 60
pv $275.22
fv $908.35
4.18

a. FVof$400each 6 months for 5 years at a nominal rate of 12%, compounded semiannually

r 6%
n 10
annuity -400
fv $716.34

b. FVof $200 each 3 months for 5 years at a nominal

rate of 12%, compounded quarterly

r 3%
n 20
annuity -200
Fv $361.22
4.19

a. Basedoneffective interest rates, in which bank would you prefer to deposit your money?

Ans based on the interest rate, invest in universal bank because it is paying 86% more interest rate.

B.
Invest in regional bank considering if I want to withdraw the fund during the year, interest will be paid aftwr 3 mon
sit your money?

g 86% more interest rate.

terest will be paid aftwr 3 months in comparison with universal bank which will pay interest after 1 year.
a
Rate 10%
No 5
PV 25000
PMT 6594.94

payment Interest Amotization Remaining balance

Year 0 25000
Year1 6594.94 2500 4094 29005
Year 2 6594.94 2090.5 4504 16400
Year3 6594.94 1640.06 4984 11445
Year4 6594.94 1144.57 5450 5995
Year5 6594.94 599.53 5995 0

Rate 10%
No of period 5
pv 50000
PMT 13189

c
rate 10%
no of period 10
pv 50000
pmt 8137.27
 4.21

CAGR= (12/6)1/5 -1

CAGR= 0.1487

CAGR as a percentage of sale is 14.87%

b
The assumption of a constant growth rate of 20% per year would lead to an overestimation of the true annual growth
would lead to an overestimation of the true annual growth rate.