Fill This Form To Receive Instant Help
Fill This Form To Receive Instant Help
Homework answers / question archive / 1
1.You deposit $20 per week into an account earning interest compounded weekly. If in four years you have accumulated $5,250 what annual interest rate are you receiving? Round to 2 decimal places. %
2. Much to your surprise, you were selected to appear on the TV show "The Price is Right." As a result of your prowess in identifying how many rolls of toilet paper a typical American family keeps on hand, you win the opportunity to choose one of the following: $1,700 today, $10,000 in 15 years, or $31,000 in 28 years. Assuming that you can earn 7 percent on your money, which should you choose? If you are offered $10,000 in 15 years and you can earn 7 percent on your money, what is the present value of $10,000? $ 3624.46 (Round to the nearest cent.) If you are offered $31,000 in 28 years and you can earn 7 percent on your money, what is the present value of $31,000? $ 4662.47 (Round to the nearest cent.) Which offer should you choose? (Select the best choice below.) O A. Choose $1,700.00 today because its present value is the highest O B. Choose $10,000.00 in 15 years because its present value is the highest OC. Choose $31,000.00 in 28 years because its present value is the highest.
3.Flora? Co.'s bonds, maturing in 14 ?years, pay 14 percent interest on a $1,000 face value.? However, interest is paid semiannually. If your required rate of return is 6 ?percent, what is the value of the? bond? How would your answer change if the interest were paid? annually?
1.As per the details given in the Question-
Enter the stroke in the Financial calculator-
PMT =20
N= 52*4 = 208
Fv=-5250
CPT- I/Y = 0.2169
Interest rate weekly compounded is 0.2169%
Annual interest rate = {(1+rate)^period - 1} *100
Annual interest = {(1+ 0.002169)^52 - 1}*100
Annual interest = 11.93% or
if you have simple compounding then
Annual interest rate would be-
= 52*0.02169= 11.28%
2.Present value of $1700 today is $1700a. Present value of 10000 in 15 years at 7% interest rate isPV(7%,15,0,-10000)$3,624.46b. Present value of 31000 in 28 years at 7% interest rate isPV(7%,28,0,-31000)$4,662.47c. which offer should you chooseanswerC. Choose $31000 in 28 years because its present value is the highest.
3.
Answer 1
Part 1
If coupon paid semiannually
Present Value = PVAF(Rate (6%/2=3%),n period(2X14=28)) + PVF(rate 3% ,28th )
PVAF =
PVF = Redemption amount X (1+R)^-n
= (1000 X 7%) X [ 1 - (1+ 3%)^-28 /3%] + 1000 X (1 + 3%)^-28
= 70 X[ 1 - 0.4370767532 /3%] + 1000 X 0.4370767532
= 70 X 18.76410823 + 437.08
= 1313.49 + 437.08
= $1750,57
Part 2
If coupon paid annually
= (1000 X 14%) X [ 1 - (1+ 6%)^-14 /6%] + 1000 X (1 + 6%)^-14
= 140 X[ 1 - 0.442301 /6%] + 1000 X 0.442301
= 140 X 9.295 + 442.30
= 1301.30 + 442.30
= $1743.60
PLEASE SEE THE ATTACHED FILE.
