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Financial Management Essay

Autor:   •  June 2, 2015  •  Essay  •  539 Words (3 Pages)  •  787 Views

Page 1 of 3

CHAPTER 2

EX.4

Year 1

Year 2

Year3

Cash flow

$432

$137

$797

We use the following formula:          [pic 1]

= 375.65[pic 2]

= 103.59[pic 3]

= 524.04[pic 4]

PV=PV1+PV2+PV3=375.65+10359+524.04 => PV=1003.28

EX.19

  1. PV=100000

  1.   => PV=102136.83[pic 5]

  1.  => PV=95000[pic 6]
  1.  => PV=107354,24[pic 7]
  1. PV=  => PV=92857.14 [pic 8][pic 9]

Answer: CHOOSE D BECAUSE IT HAS THE HIGHEST PV

EX.21

A = [  ]*F [pic 10]

A= (  )*20000 => A=3275.95[pic 11]

[pic 12]

[pic 13]

[pic 14][pic 15][pic 16][pic 17][pic 18]

[pic 19][pic 20]

EX.28

[pic 21]

k: compounding intervals

t: number of years

A => r =12% (Annual interest)

B => r =11.7%, r/2=5.85% = 0.0585 (Semi-annual interest)

C => r =11.5% (Continuously)

AFTER 1 YEAR:

 => FVA = $1.120
[pic 22]

  => FVB = $1.120
[pic 23]

=> FVC = $1.122[pic 24]

AFTER 5 YEAR:

 => FVA = $1.762[pic 25]

 => FVB = $1.766[pic 26]

=> FVC= $1.777[pic 27]

AFTER 20 YEAR:

 => FVA = $9.646[pic 28]

 => FVB = $9.719[pic 29]

=> FVC = $9.974[pic 30]

Answer: THE BEST INVESTMENT WOULD BE C.

CHAPTER 3

EX.15

[pic 31]

 => P = 55.84[pic 32]

Coupon rate (C) = 100*5% = 5

[pic 33]

t: frequency of coupon payments

n: number of years

 => [pic 34][pic 35]

EX.16

Coupon rate =5.5%, r/2= 2.75% (every six months)

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