QUESTION#1

PART a) PV=$500
n=1
i=6%
($530.00)
PART b) PV=$500
n=2
i=6%
($561.80)
PART c) FV=$500
n=2
i=6%
($445.00)
PART c) FV=$500
n=1
i=6%
($471.70)

QUESTION#2
PART a) PV=$500 n=10 i=6%
($895.42)
PART b) PV=$500 n=10 i=12%
($1,552.92)
PART c) FV=$500 n=10 i=6%
($279.20)
PART d) FV=$1552.90 n=10 i=12%
($499.99)
QUESTION#3
PART a)
pv = 200
fv=400
i=7%
10.24476835 years
PART b) pv=200
fv=400
i=10%
7.272540897 years
PART c) pv=200
fv=400
i=18%
4.187835134 years
PART d) pv=200
fv=400
i=100%
1 year
QUESTION#4
PART a) R=$400 n=10 i=10%
($6,374.97)
PART b) R=$200 n=5 i=5%
($1,105.13)
PART c) R=$400 n=5 i=0%
($2,000.00)
PART d) R=$400 n=10 i=10%
($6,374.97)
R=$200 n=5 i=5%
($1,105.13)
R=$400 n=5 i=0%
($2,000.00)

QUESTION#5
PART a) R=$400 n=10 i=10%
($2,457.83)
PART b) R$200 n=5 i=5%
($865.90)
PART c) R=$400 n=5 i=0%
($2,000.00)
PART d) R=$400 n=5 i=10%
($1,516.31)
R=$200 n=5 i=5%
($865.90)
R=$400 n=5 i=0%
($2,000.00)

QUESTION#6 CASH STREAM A

year payments
1 $100
2 $400
3 $400
4 $400
5 $300

i=8% i=0%

€1,251.25 €1,600.00

year CASH STREAM B

payments
1 $300
2 $400
 3 $400
4 $400
5 $100

i=8% i=0%

€1,300.32 €1,600.00

QUESTION#7
PART a) fv=749
pv=700
n=1
i= 7%
PART b) fv=749
pv=700
n=1
i= 7%
PART c) fv=201229
pv=85000
n=10
i= 9%
PART d) pv= $9000
R= $2684.80
n=5
L.H.S = $9000
R.H.S =2684.80[1-1/(1+i)^5]/i

i= 15%

QUESTION#8
pv $500
part a)
i.rate 12%
n 5
m 1
fv=pv(1+i)^n
FV= 881.1708416
FV= ($881.17)

PART b)
I.RATE 12%
n 5
m 2
fv=pv(1+i.nom/m)^n*m
FV= $895.42
FV= ($895.42)

PART c)
i.rate 12%
n 5
m 4
fv=pv(1+i.nom/m)^n*m
FV= 903.0556173
FV= ($903.06)

PART d)
i.rate 12%
n 5
m 12
fv=pv(1+i.nom/m)^n*m
FV= 908.3483493
FV= ($908.35)

QUESTION#9
FV $500
I.RATE 12%

PART a)
n 5
m 2
pv=fv/(1+i/m)^(n*m)
PV= 279.1973885
PV= ($279.20)

PART b)
n 5
m 4
pv=fv/(1+i/m)^(n*m)
PV= 276.8378771
PV= ($276.84)

PART c)
n 1
m 12
pv=fv/(1+i/m)^(n*m)
PV= 443.7246126
PV= ($443.72)

QUESTION#10
PART a)
pmt $400
m 2
n 5
i.nom 12%

Fva=pmt*((1+i/m)^(n*m)-1)/(i/m)
FV= 5272.317977
FV= ($5,272.32)

PART b)
pmt $200
m 4
n 5
i.nom 12%
Fva=pmt*((1+i/m)^(n*m)-1)/(i/m)
FV= 5374.074898
FV= ($5,374.07)

part c)
In part a compounding is semi annual while in part b compounding is quarterly that
is why Fva in part b is greater than part a.

QUESTION#11
home bank:-
m 4
i.rate 6%
EAR= (1+i/m)^m-1
EAR= 0.061363551
EAR= 0.061363551
foreign bank:-
m 1
i.rate 7%
EAR= (1+i/m)^m-1
EAR= 0.07
EAR= 0.07
PART a)
based on EAR I would prefer foreign bank because it pays higher rate.

QUESTION#12
PART a) PVA=$25000 n=5 i=10%
($6,594.94)
PART b) PV=$50,000 n=5 i=10%
($13,189.87)
PART c) PV=$50,000 n=10 i=10%
 ($8,137.27)

QUESTION#13
PART a) FV=$12000000
PV=$6000000
n=5
i= 15%

PART b) IN PART a INTEREST RATE HAS BEEN CALCULATED WHILE IN PART b GROWTH RATE HAS BEEN CALCULATED.

QUESTION#14
PV=$4000000
FV=$8000000
n=10
i= 7%
QUESTION#15
n=30
PV=$85000
R=$8273.59
i= 9%

QUESTION#16
R=$10000 n=4 i=7%

-€33,872.11

QUESTION#17
R=$1500
PV=$12000
i=9%

n= 14.77140526

QUESTION#18
Fva 10000
pmt 1250
i.rate 12%
n= 5.937988881
n= log(((i*fva)/R)+1)/(log(1+i))
n= 5.937988881

QUESTION#19
pmt $100
i.rate 7%
PVp= R/i
PVp= $1,428.57
PVp=
EEN CALCULATED.