Chapter 9:

Complete the following from the textbook:

Chapter 9: P6, P9, P10, P11, P12, P13, P15

P-6 determine the present value if $5,000 is received in the future (i.e. at the end of each indicated time period) in each of the following situation:

A 5% for ten years

B 7% for seven years

C 9% for four years

 

P-9 assume you are planning to invest $5,000 each year for 6 years and will earn 10 % per year .determine the future value of this annuity if your first $5,000 is invested at the end of the first year.

P-10 Determine the present value now of an investment of $3,000 made one year from now and an additional $3,000 made two years from now if the annual discount rate is 4%.

 

P-11 what is the present value of a loan that calls for the payment of $500 per years for 6 years if the discount rate is 10% and the first payment will be made one year from now? How would your answer change if the $500 per year occurred for 10 years?

P-12 Determine the annual payment on a $500,000, 12% business loan from a commercial bank that is to be amortized over a five year period.

P-13 Determine the annual payment on a $ 15,000 loan that is to be amortized over a 4 year period and carries a 10% interest rate. Also prepare a loan amortization schedule for this loan.

P-15 Assume a bank loan requires an interest payment of $85 per year and a principal payment of $1,000 at the end of the loan’s 8 year life.

1. How much this loan could be sold for to another bank if loans of similar quality carried an 8.5% interest rate? That is, what would be the present value of this loan?

2. Now, if interest rates on other similar quality loans are 10%, what would be the present value of this loan?

3. What would be the present value of the loan if the interest rate is 8 % on similar quality loans?