, You put S8,000 in the bark at 4% per year interest rate. How long will it take

Question

, You put S8,000 in the bark at 4% per year interest rate. How long will it take to reach $10,0002 A) Between 2&3 years B) Between 3&4 years C) Between 4&5 years D) Between 5,&6 years 0) When the interest rate is 6% per year all ofthe following are equivalent to S7.000 now xcept A) 6604 one year ago B) 8337 three years hence C) 6230 two years ago D) 7942 two years hence 11) An oil well will have a first cost of $300,000 and annual costs of $120,250. Income is expected to be S260.000 per year, what is the payback period at 8% per year interest? A) Between 1&2 years B) Between 2&3 years C) Between 3&4 years D) Between 4&5 years 12)) If a company wants to have $200,000 in a contingency fund 9 years from today-the amount of money they must deposit in years 1,2, 3 4&5 at an interest rate of8% per year is A) 30.204 B) 100,040 C) 55,098 D) 25,056

Explanation / Answer

1. 10,000 = 8,000*1.04n

n = 5.69 years

d) between 5 and 6 years

2. D) 7942 two years hence

3)

b) between 2 and 3 years

4)

PV = 200,000/1.089

FV = 0

rate = 8%

N = 5

use pmt function in Excel

Amount to be deposited = 25,056

Cash flows Year Discounted CF Cumulative cash flow        (300,000.00) 0 -300000.00 -300000          139,750.00 1 129398.15 -170601.852          139,750.00 2 119813.10                       (50,788.75)          139,750.00 3 110938.06                          60,149.30

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