Finance Home work.

chapter_4_and_5_jack_donaldson.docx

Chapter 4; 4-5, 4-7, 4-8, 4-11, 4-13

Chapter 5; 5-1, 5-4, 5-6, 5-8, 5-15

4-5 Multiyear Future Value How much would be in your savings account in eight years after

depositing $150 today if the bank pays 8 percent per year? (LG4-3)

4-7 Compounding with Different Interest Rates A deposit of $350 earns the following

interest rates:

a. 8 percent in the first year.

b. 6 percent in the second year.

c. 5 percent in the third year.

What would be the third year future value? (LG4-3)

4-8 Compounding with Different Interest Rates A deposit of $750 earns interest rates of 9

percent in the first year and 12 percent in the second year. What would be the second year

future value? (LG4-3)

4-11 Present Value What is the present value of a $1,500 payment made in six years when the

discount rate is 8 percent? (LG4-4)

4-13 Present Value with Different Discount Rates Compute the present value of $1,000 paid

in three years using the following discount rates: 6 percent in the first year, 7 percent in the

second year, and 8 percent in the third year. (LG4-4)

5-1 Future Value Compute the future value in year 8 of a $2,000 deposit in year 1 and another

$1,500 deposit at the end of year 3 using a 10 percent interest rate. (LG5-1)

5-4 Future Value of an Annuity What is the future value of a $700 annuity payment over six

years if interest rates are 10 percent? (LG5-2)

5-6 Present Value Compute the present value of a $2,000 deposit in year 1 and another $2,500

deposit at the end of year 4 using an 8 percent interest rate. (LG5-3)

5-8 Present Value of an Annuity What’s the present value of a $700 annuity payment over six

years if interest rates are 10 percent? (LG5-4)

5-15 Effective Annual Rate A loan is offered with monthly payments and a 10 percent APR.