You plan to make a down payment of 20% of the purchase price and finance the rest wit loan. The loan is fully amortizing, and requires monthly payments at the end of each month. The nominal loan rate is 5%, co much of the purchase price will you finance with the mortgage loan? 2) What is your anticipated monthly mortgage paymen Answer 1) Loan amount 2) Monthly payment Answer N I PV PMT FV 360 0.004166667 $240,000.00 ($1,288.37) Use the appropriate formulas and Excel function to solve the problem (typed-in solutions receive 0 credit) $240,000
rice and finance the rest with a 30-year fixed rate mortgage e nominal loan rate is 5%, compounded monthly. 1) How monthly mortgage payment?
Suppose that you deposit $200 at the end of each month into an account paying an expected annual rate of return of 3%, compounded monthly. How much money will you have in the account in 10 years? Answer N I PV PMT FV 120 0.0025 ($200.00) $27,948.28 Use the appropriate formulas and Excel 10 function to solve the problem (typed-in 0.03 solutions receive 0 credit) ($200.00) $27,948.28 This side is done with adjustments in the FV equation for monthly compounding
hly compounding
Today is Dec. 31, 2012. You have been saving money each month over the past year, and have just made your last deposit in of 0.2% per year, compounded monthly. You did not have a set amount that you saved each month, instead, you saved any e month. Your savings history is given below in chronological order. Assume that you started the year with $0 in savings, and d each month into a checking account beginning on Jan. 31, 2012. 1) What is the value of your total savings today? 2) What is you have earned over the year? (Hint: today is time 0) Use the appropriate formulas and Excel function to solve the problem (typed-in solutions receive 0 credit) Savings Period Cash Flow FV 21.32 0 0.00 0.00 116.13 1 (21.32) 21.71 3.48 2 (116.13) 118.08 463.15 3 (3.48) 3.53 51.06 4 (463.15) 469.36 129.09 5 (51.06) 51.66 388.07 6 (129.09) 130.39 340.14 7 (388.07) 391.31 404.74 8 (340.14) 342.42 362.44 9 (404.74) 406.77 43.44 10 (362.44) 363.65 67.00 11 (43.44) 43.51 (67.00) 67.00 12 Total 2,390.06 2,409.39
Year 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2012
Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
t year, and have just made your last deposit into a bank account that pays interest ou saved each month, instead, you saved any extra income that you had for the t you started the year with $0 in savings, and deposited your savings at the end of e value of your total savings today? 2) What is the dollar amount of interest that
An investment offers to pay you $300 per quarter for 10 years. If the annual rate is 11% with quarterly compounding, then what is the present value of these cash flows? Answer N I PV PMT FV 40 0.0275 ($7,223.43) $300.00 Use the appropriate formulas and Excel function to solve the problem (typed-in solutions receive 0 credit)
quarterly
You currently have $4,000 in a bank account that pays a nominal rate of 1%, compounded monthly. You plan to make additional monthly deposits of $200, starting at the end of this month. How many payments will you have made when your account balance reaches $50,000? Answer 207.34 0.00083333 -$4,000.00 ($200.00) $50,000.00
N I PV PMT FV
208.00 Use the appropriate formulas and Excel function to solve the problem (typed-in solutions receive 0 credit).
A basketball player is offered the following contract today, Jan. 1, 2012: $2 million immediately, $2.40 million in 2012, $2.90 2014, and $3.80 million in 2015. Assume all payments other than the first $2 million are paid at the end of the year. If the app percent per year, what is the present value of the deal? Discount Rate 10% Period 0 1 2 3 4 Present Value of year end cash flows Present Value of everything (including initial) Cash Flow (millions) $2.00 $2.40 $2.90 $3.60 $3.80 $9.88 $11.88
40 million in 2012, $2.90 million in 2013, $3.60 million in end of the year. If the appropriate discount rate is 10
Suppose you plan to save $1,000 at the end of each year for a total of 10 years. You are considering four different mutual fun an average annual return of 2%, Fund 2 has an average annual return of 5%, Fund 3 has an annual average return of 10%, and average annual return of 15%. Assume annual compounding. For each year, calculate your total account value. Graph your r sure that your graph includes a legend, axis titles, and a chart title. (Hint: Year 10 FVs in the Answer area should match the on problem.) Fund N I/YR PV PMT FV 1 2 10 10 0.02 0.05 0 0 -1000 -1000 $10,950 $12,578 3 10 0.1 0 -1000 $15,937 4 10 0.15 0 -1000 $20,304
Year 0 1 2 3 4 5 6 7 8 9 10
1 2% $0 $1,000 $2,020 $3,060 $4,122 $5,204 $6,308 $7,434 $8,583 $9,755 $10,950
Answer 2 3 5% 10% $0 $0 $1,000 $1,000 $2,050 $2,100 $3,153 $3,310 $4,310 $4,641 $5,526 $6,105 $6,802 $7,716 $8,142 $9,487 $9,549 $11,436 $11,027 $13,579 $12,578 $15,937
4 15% $0 $1,000 $2,150 $3,473 $4,993 $6,742 $8,754 $11,067 $13,727 $16,786 $20,304
$20,000
Savings Values
$15,000
$10,000
$5,000
$0 0
ng four different mutual funds: Fund 1 has average return of 10%, and Fund 4 has an account value. Graph your results. Make r area should match the ones given in the
Use the appropriate formulas and Excel function to solve the problem (typed-in solutions receive 0 credit)
should look like this example. Move this example to another location in the worksheet and create your own graph.
2% 5% 10% 15%
6 Years
10
12
2% 5% 10% 15%