0% found this document useful (0 votes)
55 views

Interest Paid For 4 Years $14,287.00: Year Line A Line B 0 1 $40,000 $28,000 2 $40,000 $28,000 3 $28,000 4 $28,000 5 6

This document contains information about various financial calculations: - Loan details including principal, interest rate, installments over 15 years - Details of a deposit including amount, interest rate, years, and ending balance - Net present value calculation for 3 investment options over 6 years, with the highest NPV option being the best choice - Calculations of effective annual returns for different compounding periods on an account with a 7% nominal interest rate - Expected returns for 2 stocks based on probabilities of different economic states

Uploaded by

Michael Johnson
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
0% found this document useful (0 votes)
55 views

Interest Paid For 4 Years $14,287.00: Year Line A Line B 0 1 $40,000 $28,000 2 $40,000 $28,000 3 $28,000 4 $28,000 5 6

This document contains information about various financial calculations: - Loan details including principal, interest rate, installments over 15 years - Details of a deposit including amount, interest rate, years, and ending balance - Net present value calculation for 3 investment options over 6 years, with the highest NPV option being the best choice - Calculations of effective annual returns for different compounding periods on an account with a 7% nominal interest rate - Expected returns for 2 stocks based on probabilities of different economic states

Uploaded by

Michael Johnson
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
You are on page 1/ 6

15 P

i
n

$90,000.00
6.50%
15

Loan installment
Installment without interest
Interest paid for 4 years
16 Day of Deposit
Last Day
Deposit
Interest rate (quarterly)
Years of deposit
Balance

$9,571.75
$6,000.00
$14,287.00
1-Jan-07
31-Dec-15
$1,000.00
3%
9
1,308.65

17

18 D

RRF

$1.75
1.22

RPm

5%
6%

3%

g
Rs
P0

9%
$56.45

19 Let us assume annual discount rate


Year
0
1
2
3
4
5
6

NPV

10%
Line A
($68,000)
$40,000
$40,000

Line B
($80,000)
$28,000
$28,000
$28,000
$28,000

$1,421.49

$8,756.23

Since, NPV for Line B is highest, we will consider line B is the best Choice

20 - a

Nominal Interest Rate


effective annual return on a
bank account that pays 7.00%
nominal interest with annual
compounding

20-b

Nominal Interest Rate


effective annual return on a
bank account that pays 7.00%
nominal interest with semiannual compounding

20-c

Nominal Interest Rate


effective annual return on a
bank account that pays 7.00%
nominal interest with quarterly
compounding

20-d

Nominal Interest Rate


effective annual return on a
bank account that pays 7.00%
nominal interest with monthly
compounding

20-e

Nominal Interest Rate


effective annual return on a
bank account that pays 7.00%
nominal interest with Daily
compounding

7.00%

7.00%
7.00%

7.12%
6.90%

7.08%
6.85%

7.07%
6.66%

6.89%

7 common stock
preferred stock

60%
40%
12
14.00%

State of Economy
Boom

Probability of
State of
Economy

Stock A

64%

21%

Bust

36%

0.236643
0.143319

20.30%

15%

the best Choice

Line C
($107,000)
$26,000
$26,000
$26,000
$26,000
$26,000
$26,000

$6,236.78

Stock B

Stock C

15%

35%

11%

17%

You might also like