Business Finance HW Ch 4 - Connect
1. There are many generations of the BAII Plus. How long has the student version been available? 2. According to the video, what is the best reason to rest your calculator? 3. The Cash Flow worksheet lets us handle _______ sets of cash flows?
(1) 1991 (2) To make sure it is reliable. (3) Lumpy
Excel: https://gyazo.com/60de1e43034485f76113d3763bd26bcf Finding Future Value(FV)
(a) = FV(rate, nper, pmt, [pv], [type]) = FV(E9,D9,,-C9) = $7,575.83 (b) = FV(rate, nper, pmt, [pv], [type]) = FV(E10,D10,,-C10) = $12,310.02 (c) = FV(rate, nper, pmt, [pv], [type]) = FV(E11,D11,,-C11) = $397,547.04 (d) = FV(rate, nper, pmt, [pv], [type]) = FV(E12,D12,,-C12) = $306,098.52
Excel: https://gyazo.com/82bc43440187fd752e25c2335ee2e1e7 Finding the time (NPER)
(a) = NPER(rate, pmt, pv, [fv], [type]) = NPER(E9,,-C9,F9) = 15.59 years (b) = NPER(rate, pmt, pv, [fv], [type]) = NPER(E10,,-C10,F10) = 9.40 years (c) = NPER(rate, pmt, pv, [fv], [type]) = NPER(E11,,-C11,F11) = 26.41 years (d) = NPER(rate, pmt, pv, [fv], [type]) = NPER(E12,,-C12,F12) = 24.52 years
Excel: https://gyazo.com/62607f13b42850ce336f313c8469bf58 Finding Intrest rate(RATE)
(a) = Rate(nper, pmt, pv, [fv], [type], [guess]) = RATE(D9,,-C9,F9) = 13.18% (b) = Rate(nper, pmt, pv, [fv], [type], [guess]) = RATE(D10,,-C10,F10) = 6.72% (c) = Rate(nper, pmt, pv, [fv], [type], [guess]) = RATE(D11,,-C11,F11) = 7.37% (d) = Rate(nper, pmt, pv, [fv], [type], [guess]) = RATE(D12,,-C12,F12) = 10.86%
Assume that in 2018, the first edition of a comic book was sold at auction for $727,000. The comic book was originally sold in 1937 for $.10. For this to have been true, what was the annual increase in the value of the comic book?
(a) A = 727,000 (sold price) P = 0.10 (original price) r = ? n = 1 t = 81 years T = 2018 -1937 = 81 727,000 = 0.10( 1 + r)^(1 x 81) (727,000/0.1)^(1/81) = 1 + r 1.21537 = 1 + r r = 0.21537 Annual Increase(r) = 21.54%
You have $5,000 to deposit. Regency Bank offers 15 percent per year compounded monthly (1.25 percent per month), while King Bank offers 15 percent but will only compound annually. How much will your investment be worth in 20 years at each bank?
(a) A = P(1 + r/n)^(n x t) P = 5,000 r = 15% // .15 n = 12( Compound annually) t = 20 years A = 5000( 1 + 0.15/12)^(12 x 20) A = 98577.47 Regency Bank = $98,577.47 (b) A = P(1 + r/n)^(n x t) P = 5,000 r = 15% // .15 n = 1 t = 20 years A = 5000( 1 + 0.15/1)^(1 x 20) A = 81832.69 King Bank = $81,832.69
(a) At 4.75 percent interest, how long does it take to double your money? (b) At 4.75 percent interest, how long does it take to quadruple your money?
(a) FV = PV(1 + r)^t 2x = x(1 + 0.0475)^t Take log of both sides log 2 = t x log 1.0475 t = (log 2 / log 1.0475) t = 14.94 Length of time = 14.94 years (b) FV = PV(1 + r)^t 4x = x(1 + 0.0475)^t t = (log 4 / log 1.0475) t = 29.87 Length of time = 29.87 years
Assume that in 2018, a copper penny struck at the Philadelphia mint in 1793 was sold for $240,000. What was the rate of return on this investment?
(a) Future Value = Present Value*((1+r)^t) t = 2018 - 1793 t = 225 240,000 = 0.01(1+ r)^225 1+ r = 240,000,000^(1/225) 1+ r = 1.07845 r = 0.07845 r = 7.85%
You have just received notification that you have won the $2.1 million first prize in the Centennial Lottery. However, the prize will be awarded on your 100th birthday (assuming you're around to collect), 70 years from now. What is the present value of your windfall if the appropriate discount rate is 11 percent?
(a) PV = FV / ((1+r)^t) PV = 2,100,000 / (1 + 0.11)^70 PV = 1,411.2722 Value of prize 2,100,000.00 PVF @11% for 70 years 0.00067203 Present Value of prize 1,411.27
Excel: https://gyazo.com/3bb915ee7c370870339f1d45492a32e6 Finding Present Value(PV)
(a) PV = FV / ((1+r)^t)\ FV = 15,451 r = 9% n = 1 t = 13 years PV = 15451 / (1 + .09)^(1 x 13) PV = 5039.79 Excel ANSWER = PV(E9,D9,,-F9) (b) PV = FV / ((1+r)^t) FV = 51,557 r = 7% n = 1 t = 4 years PV = 51,557 / (1 + .07)^(1 x 4) PV = 39332.59 Excel ANSWER = PV(E10,D10,,-F10) (c) PV = FV / ((1+r)^t) FV = 886,073 r = 24% n = 1 t = 29 years PV = 886073 / (1 + .24)^(1 x 29) PV = 1,730.78 Excel ANSWER = PV(E11,D11,,-F11) (d) PV = FV / ((1+r)^t) FV = 550164 r = 35% n = 1 t = 40 years PV = 550164 / (1 + .35)^(1 x 40) PV = 3.37 Excel ANSWER = PV(E12,D12,,-F12)