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HW1

The document contains a series of financial problems related to future and present value calculations, including savings, annuities, and discount rates. It presents scenarios involving different interest rates, compounding frequencies, and payment timings to determine total amounts and present values. The problems require applying financial formulas to compute the outcomes based on given parameters.

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iix03874
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2 views

HW1

The document contains a series of financial problems related to future and present value calculations, including savings, annuities, and discount rates. It presents scenarios involving different interest rates, compounding frequencies, and payment timings to determine total amounts and present values. The problems require applying financial formulas to compute the outcomes based on given parameters.

Uploaded by

iix03874
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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Homework (1)

1. Mr. A just started to save $1,000 every quarter for the next four years in a bank account
paying 12 percent interest. How much will he have at the end of the fourth year?

2. You have the following account offers:

 Account A has an annual percentage rate of 7.55 percent but with interest
compounded monthly.
 Account B has annual percentage rate of 7.45 percent with interest compounded
quarterly.
Which account provides the highest effective annual return?

3. Calculate the future value of an annuity of $1,000 each quarter for 10 years, deposited at
12 percent compounded quarterly.

4. Calculate the future value of $200 received today and deposited for three years in an
account which pays semiannual interest of 8 percent

5. The future value of a $2,000, end of the period quarterly payments deposited at 8 percent
annually for each of the next 10 years is
Present value problems:

6. Calculate the present value of an expected payment of $90,000 to be received in 4years, assuming
6% discounted semis annually.

7. Calculate the present value of the following expected values assuming 12% annual discount rate
assuming quarterly discounting.

Expected cash flows


Year ($)
0 20000
1 50000
2 60000
3 0
4 30000
5 20000

8. $3,600 Monthly rental payments are expected for the next 3 years, assume 24% annual discount
rate , calculate the present value of the above payments assuming :
a. End of the period payments
b. Beginning of the period payments

9. Calculate the present value of $450,000 expected to be received in 500 days, discounted
continuously at 3%.

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