Do not use any spread sheets you can solve any problem youd like. i rate all the

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Do not use any spread sheets you can solve any problem youd like. i rate all the time please show work

eOUTVALENCE CHAP.6 Supplementary Problems 6.15 What series of equal annual payments is economically equivalent to the investment of a present amount 6.16 What single amount at the end of the fifth year is equivalent to a uniform annual series of $2000 per year 6.17 A series of 12 annual payments of $2000 is equivalent to three equal payments, one each at the end of 12 of $5000 for 5 years at 12%, compounded annually? Ans. $1387.03 for 10 years, if the interest rate is 10%, compounded annually? Ans. $19791.09 years, 15 years, and 20 years. The interest rate is 10%, compound annually. What is the amount of the three equal payments? Ans. $19284.55 6.18 What is the equivalent present value of the following series of payments: $7000 the first year, $6500 the second year, $6000 the third year, $5500 the fourth year, and S5000 the fifth year? The interest rate is 10%, compounded annually. Ans. $23104.44 Is a series of 100 equal quarterly payments of $800 equivalent to a present amount of $35 000 if the interest rate is 8% per year, compounded quarterly? Ans. No; is equivalent to exactly $34 482.76 6.19 Machine X will produce cost savings of $5000 per year for four years; machine Y will produce cost savings of $4000 per year for five years. If the interest rate is 10%, compound annually, are these two machines economically equivalent in terms of the present value of their cost savings? Ans. No: Px S15 849.37 and Py $15 163.00 6.20 Find the uniform annual series of seven payments that would be equivalent to the following gradient series: $500 initially, with a $50 increment per year, for a total of seven years. The interest rate is 12% compound annually Ans. $627.58 6.21 6.22 A woman can invest $100 000 for 15 years in a bank and expect to receive a yearly return of $10000. The woman's objective is to earn 12% per year, compounded annually, on her investments. Is this objective met by the bank plan? Ans. No; the woman requires a return of $14 682 per year 6.23 Machine A will save S5000 per year for 6 years; machine B will save $6000 per year for 5 years. If the interest rate is 10%, compounded annually, do these two machines have equal future values at the end of the sixth year? Ans. No: FA-$38 578 and FB = $36 630.60× 1.10 = $40293.66- The XYZ Bank advertises it will pay $3869.70 in cash at the end of 20 years to anyone who deposits $1000, the ABC Bank states that it pays 10% per year, compounded annually, on all deposits left one year or more. Which bank is paying the higher interest rate, and by how much? Arts, ABC, XYZ is paying only 7% per year, compounded annually 6.24 A series of quarterly payments of $1000 for 25 years is economically equivalent to what present sum, if the quarterly payments are invested at an annual rate of 8%, compounded quarterly? Ans. $43 103.45 6.25 What series of equal annual payments is economically equivalent to the investment of a present amount of $5000 for 5 years at 12%, compounded annually? 6.26 Ans. $1387.03 A promissory note has outstanding payments of $650 at the end of each of the next five years. What market price would be paid for this note by an investor who requires a 12% yield on his investments, compounded quarterly? Ans. $2311.47 6.27 6.28 A loan of $750 is to be repaid in 18 equal monthly installments, computed as follows: Loan Interest at 1% per month for 18 months Credit check and processing fee $750 144 60 $954 Monthly payment. S95418= $53 What (a) nominal and (b) effective annual interest rates are being charged? Ans. (a) 32.15%, (b) 37.34%

Explanation / Answer

6.15

answer

PMT or annual payments=5000/((1-(1+12%)^(-5))/12%)

=1387.03

the above is the answer

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