Assignment:
1. Given the cash flows below, drawing the cash flow diagram, determine the future worth an interest rate of 8% compounded annually.
|
Year
|
1
|
2
|
3
|
4
|
|
Cash Flow in $
|
-5K
|
-6K
|
-7K
|
-8K
|
2. Determine the PW of the cash flows given in table below for an interest rate of 18%. Show the cash flow diagram.
|
Year
|
0
|
1
|
2
|
3
|
4
|
5
|
6
|
7
|
8
|
9
|
10
|
|
Cash Flow in $
|
100
|
80
|
60
|
40
|
20
|
0
|
-20
|
-40
|
-60
|
-80
|
-100
|
3. Acument Global Technologies is exploring investment opportunities for $10 M. The company would like to maximize the return on this investment. Four investment opportunities being explored are for a period of 10 years. Help the company choose the best investment opportunity.
a. 10% compounded quarterly.
b. 9.85% compounded daily.
c. 9.95% compounded monthly.
4. A loan of 10,000 is to be repaid a nominal interest rate of 12% year. Determine,
a. the effective interest rate if loan is paid back every six months.
b. the effective interest rate if loan is paid back every three months.
c. the effective interest rate if loan is paid backevery month.
d. the effective interest rate if loan is paid back biweekly
e. the. effective interest rate if loan is paid back every week