FIN 100 Homework Find the future value (FV) one year from now of a $7,000 investment at a 3 percent annual compound interest rate, Business & Finance Assignment Homework Help

 

 

 

Complete the following from the textbook:

·  Chapter 9: P1, P6, P8, P9, P10, P11, P12, P13, P14, P15, P18, P20, P21, P22, P23, P24

 

 

PROBLEMS

P1

1. Find the future value (FV) one year from now of a $7,000 investment at a 3 percent annual compound interest rate. Also, calculate the FV if the investment is made for two years.

P6

6. Determine the present values (PVs) if $5,000 is received in the future (i.e., at the end of each indicated time period) in each of the following situations:

a. 5 percent for ten years

b. 7 percent for seven years

c. 9 percent for four years

P8

8. Determine the future value (FV) at the end of two years of an investment of $3,000 made now and an additional $3,000 mad one year from now if the compound annual interest rate is 4 percent.

P9

9. Assume you are planning to invest $5,000 each year for six years and will earn 10 percent per year. Determine the future value (FV) of this annuity if your first $5,000 is invested at the end of the first year.

P10

10. Determine the present value (PV) now of an investment of $3,000 made one year from now and an additional $3,000 made two years from now if the annual discount rate is 4 percent.

P11

11. What is the present value (PV) of a loan that calls for the payment of $500 per year for six years if the discount rate is 10 percent and the first payment will be made one year from now? How would your answer change if the $500 per year occurred for ten years?

P12

12. Determine the annual payment on a $500,000, 12 percent business loan from a commercial bank that is to be amortized over a five-year period.

P13

13. Determine the annual payment on a $15,000 loan that is to be amortized over a four-year and carries a 10 percent interest rate. Prepare a loan amortization schedule for this loan.

P14

14. You are considering borrowing $150,000 to purchase a new home.

a. Calculate the monthly payment needed to amortize an 8 percent fixed-rate-30-year

mortgage loan.

b. Calculate the monthly amortization payment if the loan in (a) was for 15 years.

P15

15. Assume a bank loan requires an interest payment of $85 per year and a principal payment of $1,000 at the end of the loan’s eight-year life.

a. At what amount could this loan be sold for to another bank if loans of similar quality

carried an 8.5 percent interest rate? That is, what would be the present value (PV) of this

loan.

b. Now, if interest rates on other similar quality loans are 10 percent, what would be the PV of

this loan?

c. What would be the PV of the loan if the interest rate is 8 percent on similar quality loans?

P18

18. Use a financial calculator or computer software program to answer the following questions:

a. What would be the future value (FV) of $7,455 invested annually for nine years beginning

one year from now if the annual interest rate is 19 percent?

b. What would be the present value (PV) of a $9,532 annuity for which the first payment will

be made beginning one year from now, payments will last for twenty-seven years, and the

annual interest rate is 13 percent?

P20

20. Use a financial calculator or computer software program to answer the following questions.

a. What is the present value (PV) of $359,000 that is to be received at the end of twenty-three

years, the discount rate is 11 percent, and semiannual discounting occurs?

b. How would you answer for (a) change if monthly discounting were used?

P21

21. What would be the present value (PV) of a $9,532 annuity for which the first payment will be made beginning one year from now, payments will last for twenty-seven years, the annual interest rate is 13 percent, quarterly discounting occurs, and $2,383 is invested at the end of each quarter?

P22

22. Answer the following questions.

a. What is the annual percentage rate (APR) on a loan that charges interest of .75 percent per

month?

b. What is the effective annual rate (EAR) on the loan described in (a)?

P23

23. You have recently seen a credit card advertisement stating that the annual percentage rate (APR) is 12 percent. If the credit card requires monthly payments, what is the effective annual rate (EAR) of interest on the loan?

P24

24. A credit card advertisement states that the annual percentage rate (APR) is 21 percent. If the credit card requires quarterly payments, what is the effective annual rate (EAR) of interest on the loan?