I5.401 Recitation
Extra Session: Mid-Term Review
General Advice
Show your work! Answers only give you partial credit
Write down the formulas you use . Draw timelines for cash flows Make sure you apply the annuity/ perpetuity formulas correctly 3 Example: PV (Annuity) = A +1 Formula A A A A A refers to value in t = 0
t=I
t= 2
t=3
t= 4
t=T
: State your assumptions Leave plenty of decimal places for interest rates (e.g., 1.2345%)
Sample Midterm Solutions
Q3 Compounding 00 3 APR-EAR Conversion
Q 3 C