State of the economy Probability Project A Project B Poor 20% $3000 $5000 Averag

Question

State of the economy

Probability

Project A

Project B

Poor

20%

$3000

$5000

Average

30%

$4000

$7000

Good

50%

$6000

$15,000

Find the correlation coefficient between the twoprojects.

3. Akron Corporation hasborrowed $1.2 million from a bank with the understanding that itwill pay $50,000 a month, until the loan is paid off. The bank willcharge 9% per annum interest on the unpaid balance, calculatedmonthly. Akron will make the payments at the end of each month.Find the following:

A.   How long will it take Akron to pay off the loan?

B.   What is the balance of the loan after 24 months

4. You would like toaccumulate a million dollars for your retirement. You have another35 years before you retire. The local bank, where you intend tokeep the money, will compound interest monthly at the annual rateof 6%. How much money should you deposit at the beginning of eachmonth to reach your goal?

PLEASE SHOW ALL CALCULATIONS ANDWORK…..

State of the economy

Probability

Project A

Project B

Poor

20%

$3000

$5000

Average

30%

$4000

$7000

Good

50%

$6000

$15,000

Explanation / Answer

?

9% / 12

6%/12

35*12

Total BorrowedAmount $1,200,000 Monthly Payment $50,000 Interest rate per annum 9% Number of Periods

?

Calculating Number ofPeriods(Nper): (Using Ms-Excel "NPER"Function): Interest Rate (Rate)

9% / 12

Monthly Payment Amount(PMT) -$50,000 Present Value of Borrowed Amount(PV) $1,200,000 Number of Periods (Nper) 26.55922706 Number ofPeriods   26.56 Future Value(FV) = $1,000,000 Number of Years (t) = 35years Annual Interest rate (r) = 6% (compounded monthly) Present Value of Deposit Amount (PV)= ? Calculating Monthly Deposit: (Using Ms-Excel "PMT"Function): Interest Rate (Rate)

6%/12

Number of Periods (Nper)

35*12

Future Value (FV) -$1,000,000 Monthly Deposit Amount $701.90 Monthly DepositAmount $701.90

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