QuickHelper

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About QuickHelper

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    Phoniex
    Jul-2007 - Jun-2012

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Category > Accounting Posted 13 Jul 2017 My Price 10.00

Accounting Finance

Please complete In Excel

 

1. Perpetuity

If an investment policy pays you $25,000 per year forever and you require 6% p.a. return on this investment, how much will you pay for this policy? What about a policy that pays $30,000 per year?

2. EAR

Calculate the EAR in the following cases:

APR

compounding

EAR

10%

Quarterly

  

17%

Monthly

  

13%

Daily

  

9%

Semi-annually

  

Hint: Use the EFFECT function in Excel.

3. APR

Find the APR for each of the following cases:

APR

compounding

EAR
 

Semi-annually

14.00%
 

Monthly

9.00%
 

Weekly

8.00%
 

Daily

13.00%

Hint: Use the NOMINAL function in Excel.

4. Present Values

Calculate the present values for the two following cash flows:

 

Discount Rate

  

Discount Rate
 

7.30%

  

9.20%

Year

Cash Flow from A

  

Cash Flow from B

1

$1,200

  

$1,400

2

1,100

  

1,900

3

800

  

3400

4

600

  

4300

5. Annuity and Perpetuity

You are going to receive a 30-year annuity of $105,000. Your friend, Nancy, is going to receive a perpetuity of $105,000. If the appropriate interest rate is 7% p.a., how much more is Nancy's cash flow worth than yours?

6. Comparing Cash Flows

You've just joined a new firm. They offered you two different salary arrangements:

A. $6,100 per month for the next two years.

B. $4,800 per month for the next two years, plus a $25,000 signing bonus.

If the interest rate is 7% p.a., which arrangement do you prefer?

7. Future Values

Assuming an interest rate of 6.9% p.a., what is the future value of the following cash flows five years from now? What is the future value 10 years from now?

Year to find value

10

Interest rate

6.9%
   

Year

Cash flow

2

$ 15,000

3

24,000

5

33,000

8. Future Values

An insurance company is offering a new policy. The parent makes the following six payments to the insurance company, and no more payments after child's sixth birthday. When the child reaches age 65, he/she receives $350,000. If the interest rate is 10% for the first 6 years, and 7% for all subsequent years, is the policy worth buying?

Year

Payment

1

$ 800

2

$ 800

3

$ 900

4

$ 900

5

$ 1,000

6

$ 1,000
   

# of years until retirement

65

Payout at retirement

$ 350,000
   

Interest rate 1

10%

# of years

6
   

Interest rate 2

7%

# of years

59

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Answers

QuickHelper
(10)
Status NEW Posted 13 Jul 2017 06:07 PM My Price 10.00

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