1a. You buy a car that costs 34,500. You pay interest of 0.4% compounded monthly. What i
1b. What is your monthly car payment if you have a 48 month term?
Rate
Months (a)
Months (b)
Amount
0.004
60
48
34500
pounded monthly. What is your monthly car payment if you have a 60 month term?
PMT
-$791.39
month term?
PMT
-$647.90
2a. Assume you just graduated and started your job today. You hope to retire in 35 years an
2b. With the same assumptions at 2a, how much will you have in your account at 8% interes
2c. If you start saving at the end of year 1 and save all annual periods until you retire, how m
Years (1)
Years (2)
24
35
Rate (1)
Rate(2)
0.05
0.08
Amount
5000
ou hope to retire in 35 years and plan to put away money ($5,000 annually) in your 401K account, bu
al periods until you retire, how much will you have in your 401K if you earn 5% interest and save $5,00
2a.
$222,509.99
2b.
$333,823.80
2c.
$861,584.02
ally) in your 401K account, but you don't end up saving any money until 11 years from now. How muc
il 11 years from now. How much money will you have at retirement if you account earns 5% annually?
3.0 A Family Friend is interested in starting their own restaurant business and heard you cou
The parameters around their business are: Assume interest/borrowing rate of 6% per year. A
Do not consider Tax or Depreciation Impact - Deter
At a 6% interest, how many years does it take to b
Option 1
Leasing
Lease Space
Lease Equipment
Option 2
$14,000
$5,000
Lease/buy
Lease Space
Buy Equipment
Option 3
$14,000
$22,000
Buy Everything
Buy and Rennovate Space
Buy Equpment
Option
NPV @ 5 years
NPV @ 15 years
$84,811.19
$219,550.78
$84,940.37
$186,748.76
$102,000.00
$102,000.00
$80,000
$22,000
usiness and heard you could help them make effective economic decisions. They have 3 choices :
wing rate of 6% per year. Assume the business will be analyzed for a 5 year life and a
epreciation Impact - Determine the net present worth of each option at 5 and 15 years
ny years does it take to break even between Option 1 and Option 3?
per year
per year
per year
Total
Total
Total
1.02
Option 1 - Year
0
1
2
3
Space
$0.00
$14,000.00
$14,500.00
$15,000.00
Equipment
$0.00
$5,000.00
$5,100.00
$5,202.00
Total
$0.00
$19,000.00
$19,600.00
$20,202.00
4
5
6
7
8
9
10
11
12
13
14
15
$15,500.00
$16,000.00
$16,500.00
$17,000.00
$17,500.00
$18,000.00
$18,500.00
$19,000.00
$19,500.00
$20,000.00
$20,500.00
$21,000.00
$5,306.04
$5,412.16
$5,520.40
$5,630.81
$5,743.43
$5,858.30
$5,975.46
$6,094.97
$6,216.87
$6,341.21
$6,468.03
$6,597.39
$20,806.04
$21,412.16
$22,020.40
$22,630.81
$23,243.43
$23,858.30
$24,475.46
$25,094.97
$25,716.87
$26,341.21
$26,968.03
$27,597.39
ar life and a 15 year life because they just don't know if it will make it.
nd 15 years
0.06
PV
$0.00
$17,924.53
$17,443.93
$16,961.99
Option 2 - Year
0
1
2
3
Space
$0.00
$14,000.00
$14,500.00
$15,000.00
$16,480.33
$16,000.41
$15,523.52
$15,050.78
$14,583.21
$14,121.69
$13,666.97
$13,219.72
$12,780.50
$12,349.79
$11,927.99
$11,515.43
4
5
6
7
8
9
10
11
12
13
14
15
$15,500.00
$16,000.00
$16,500.00
$17,000.00
$17,500.00
$18,000.00
$18,500.00
$19,000.00
$19,500.00
$20,000.00
$20,500.00
$21,000.00
Equipment
$22,000.00
$0.00
$0.00
$0.00
Total
$22,000.00
$14,000.00
$14,500.00
$15,000.00
PV
$22,000.00
$13,207.55
$12,904.95
$12,594.29
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$15,500.00
$16,000.00
$16,500.00
$17,000.00
$17,500.00
$18,000.00
$18,500.00
$19,000.00
$19,500.00
$20,000.00
$20,500.00
$21,000.00
$12,277.45
$11,956.13
$11,631.85
$11,305.97
$10,979.72
$10,654.17
$10,330.30
$10,008.96
$9,690.90
$9,376.78
$9,067.17
$8,762.57
Option 3 - Year
0
1
2
3
Space
$80,000.00
$0.00
$0.00
$0.00
Equipment
$22,000.00
$0.00
$0.00
$0.00
4
5
6
7
8
9
10
11
12
13
14
15
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
Total
$102,000.00
$0.00
$0.00
$0.00
PV
$102,000.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00