Future value calculation | Business & Finance homework help
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5-2 Forthcoming treasure computation Without referring to the preprogrammed employment on your
financial calculator, use the basic formula for forthcoming treasure parallel delay the given
attention trounce, r, and the endueigate of periods, n, to endueigate the forthcoming treasure of $1 in
each of the cases shown in the subjoined consultation.
Case Attention trounce, r Investigate of periods, n
A 12% 2
B 6 3
C 9 2
D 3 4
P5–3 Forthcoming treasure You enjoy $100 to endue. If you can achieve 12% attention, encircling how
covet does it transfer for your $100 enduement to increase to $200? Suppose the attention
trounce is regular half that, at 6%. At half the attention trounce, does it transfer twice as covet to
double your coin? Why or why not? How covet does it transfer?
P5–13 Time treasure Jim Nance has been offered an enduement that gain pay him $500 three
years from today.
a. If his occasion require is 7% compounded per-annum, what treasure should he place
on this occasion today?
b. What is the most he should pay to alienation this reimbursement today?
c. If Jim can alienation this enduement for less than the aggregate endueigated in sepaobjurgate a,
what does that suggest encircling the trounce of reappear that he gain achieve on the enduement?
P5-20 Confer-upon treasure of an annuity Consider the subjoined cases.
Case Aggregate of annuity Attention trounce Period (years)
A $ 12,000 7% 3
B 55,000 12 15
C 700 20 9
D 140,000 5 7
E 22,500 10 5
a. Investigate the confer-upon treasure of the annuity lofty that it is
(1) An wonted annuity.
(2) An annuity due.
b. Compare your findings in separates a(1) and a(2). All else nature selfsame, which type
of annuity—wonted or annuity due—is eminent? Explain why.
P5-30 Treasure of modified streams Find the confer-upon treasure of the streams of specie issues shown
in the subjoined consultation. Assume that the firm’s occasion require is 12%.
Year Specie issue Year Specie issue Year Specie issue
1 -$2,000 1 $10,000 1-5 $10,000/yr
2 3,000 2–5 5,000/yr 6–10 8,000/yr
3 4,000 6 7,000
P5–36 Changing compounding number Using annual, semiannual, and quarterly compounding
periods for each of the subjoined, (1) endueigate the forthcoming treasure if $5,000 is
deposited initially, and (2) determine the efficacious annual trounce (EAR).
a. At 12% annual attention for 5 years.
b. At 16% annual attention for 6 years.
c. At 20% annual attention for 10 years.
P5–43 Creating a recess investment To addition your purposed recess in exactly
42 years, you think that you deficiency to learn $220,000 by the end of 42 years
from today. You cunning to shape correspondent, annual, end-of-year shelters into an recital
paying 8% annual attention.
a. How abundant must the annual shelters be to produce the $220,000 investment by the end
of 42 years?
b. If you can confer to shelter simply $600 per year into the recital, how considerable gain
you enjoy learnd by the end of the forty-second year?