6. A contracting company purchased single unit truck of $13,500 now. The cost of the truck is to be paid based on annual payments of $3600 per year for 8 years starting 2 years from now. Tip: use tables and draw cash flow. a. What is the present worth of the payments if the interest rate is 4.5% per year? b. What is the future worth of the payments if the interest rate is 4.5% per year? c. What is the equivalent annual payment if the interest rate is 8% per year?
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- A truck costs $13,500 - Payments of $3,600 per year for 8 years - Payments start 2 years from now - Interest rate is 4.5% per year (for parts a and b) - Interest rate is 8% per year (for part c) Show more…
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Question 4.1 Calculate the accumulated value, at the end of 8 years, of payments of $4,000 a year which are paid monthly at the start of each month. The annual effective rate of interest is 9%. Question 4.3 Determine the present value of payments of $500 at the end of each year for the next 20 years. The nominal rate of interest is 5% a year convertible monthly. Question 4.5 Determine the annual effective interest rate that corresponds to a nominal rate of discount of 6% a year convertible quarterly. Question 4.7 Find the accumulated value at time 15 years of payments of $455 at times 0, 1, 2, and so on, until the last payment at 14 years. The nominal rate of discount is 3.5% a year convertible monthly.
Adi S.
Danielle F.
A) A client just deposited ¢7,000,000 in one of your investment funds which is currently earning a 10% return. The bank has advised the client to deposit an additional ¢4,000,000 at the end of each of the next three years. The client would like to know how much the total amount in this investment will be in three years’ time. Kassim has just been offered a job at ¢600,000 a year. He anticipates his salary will increase by 6% annually until his retirement in 40 years. B) Kassim’s required return on any investment is 9%. What is the present value of Kassim’s lifetime salary? C) This morning, TL Trucking invested $90,000 to help fund a company expansion project planned for 4 years from now. How much additional money will the firm have 4 years from now if it can earn 6 percent rather than 5 percent on its savings? D) Prepare an amortization schedule for a five-year loan of $36,000. The interest rate is 9 percent per year, and the loan calls for equal annual payments. How much interest is paid in the third year? How much total interest is paid over the life of the loan? E) One of your colleagues is trying to convince Mercer to invest in a special fund your firm has just started. Mercer wants to earn an effective annual rate of 10% and is looking at an investment that compounds on a quarterly basis. What APR must the investment pay so as to convince Mercer to put her money into the fund?
Akash M.
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