Project #25744 - finance

25 math problems must show work

 

 

FIN 3414 FIRST ONLINE EXAMINATION

 

 

 

             

 

 

 

1. The sum of an infinite geometric series     ar, ar2, ar3, ar4, ……up to      is

  

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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2. Consider the following series

 

    S =    10   +    10     +    10     + ………...  10                  

                        (1.06)      (1.06)2                 (1.06)100        

 

    The sum of this series is

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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3. Consider the following series S = 3 2 + 3 4 + 3 6 + 3 8 + . . . + 320        

 

       The sum is

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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4. Consider the following series

 

    S =      10    +    10     +   10    +    10      + ……. forever

             (1.06)4   (1.06)8       (1.06)12   (1.06)16                  

(Answer correct within 1.0)

   

The sum of this series is

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Problems 5 to 7 assume SIMPLE RATE OF INTEREST

 

 

5. What is the future value of $10.30 (deposited today) at the end of 20 years, assuming the rate of

    interest is 0.5 percent? (Answer correct within 2 cents)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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6. In how many years an amount will double if the rate of interest is 0.718 percent?

    (Answer correct within 2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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7. Three deposits of $ 10 each are made in an account at the beginning of each year. If the rate of

     interest is 12 percent per year, the present value of these deposits is

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Rest of the Multiple Choice Problems Pertain To COMPOUND RATE OF INTEREST

 

 

8. What is the future value of $ 50 in 20 years if the rates of interest are 10 percent for the first six

    years, 11 percent for next 5 years and 12 percent for the remaining period?

    (Answer correct within one dollar)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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9. You will receive $160 in the year 89. What is its present value at the beginning of 87 if the rate of

     interest is 13 percent? (Answer correct within 50 cents)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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10. Deposits of $ 10 each are made in an account at the beginning of each year for three years.

      If the rate of interest is 12 percent per year, the present value of these deposits is

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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11. In how many years $ 100.69 will become $ 382.42 if the rate of interest is 0.69 percent

      (Answer correct within 0.5)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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12.  Suppose you deposit $385.54 at the beginning of each year for 10 years. Find the future value of 

       these deposits at the end of year 10 if the rate of interest is 10 percent compounded annually

       (Correct within five dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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     13.  You deposited $100 three years ago in the First National Bank. Today the balance in your 

           account is $140. If First National Bank offers daily compounding, compute:

           (Assume 360 days in a year)

 

            (1) the annual nominal rate of interest;

            (2) the annual effective rate of interest.

            

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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14. Bank A pays a 13 percent nominal rate of interest compounded daily, while the Bank B pays 13.5 percent compounded semiannually. Which bank offers the higher effective rate?.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Problems 15 and 16 use the following information

             

                ABC Corporation expects to earn $200,000 at the end of the year and projects a growth in earnings of 5 percent per year.  If k is 10 percent, what is the present value of the earnings if

 

 

15.      It expects the growth forever

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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16.   It expects growth for only ten years and then ceases to exist

        (Correct within $100)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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17.    You are made the following proposition “pay us $ 200/year for 10 years and we will pay $200 

         per year thereafter in perpetuity”. If this is a fair deal, what is the rate of interest?

         (Correct within 0.5 percent)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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18.    You will deposit $ 20 per month in an account that pays a monthly rate of interest of 8.621

         percent. How long will it take for your account to have $980? (Correct within 0.3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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19.     Mr.I.M.Smart started depositing $ A in an account that paid 12 percent rate of interest per            

          year. After 21 deposits his account had $23864.20.The present value of the annuity of $A is 

          (Correct within 5 dollars)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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20.     Mr. & Mrs. Debt deposited $1000, $2000 and $2000 at the end of years 1,2 and 3 .The rates of

          interest during the years were 0.12, 0.15 and 0.20. Obtain the present value of these deposits if

          the interest is compounded monthly? (Correct within $ 2)

   

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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21.  If equal withdrawals of $20 at the end of each day with the initial investment of $200 are made,

       the number of days required to exhaust the amount, if the rate of interest is 10 percent per day,

       will be (assume 365 days in a year)

 

 

 

 

 

 

 

 

 

 

 

 

 

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22.  Mr. John P.L.K. Prabhakara Rao deposited $100 in an account that pays 20 percent rate of

       interest- compounded continuously. He intends to keep the account for 20 years. The effective

       rate of interest his account is earning is

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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23. In the beginning of year 13, the sales revenue of ABC Company was $200 million. At the end of

      year 20, the sale was $ 478 million. What is the growth rate in sales of ABC Company? (Hint;

      growth rates are like interest rates except that unlike interest rate which cannot be negative,

      growth rate can be negative)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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24.  What is the present value of $1.36 million deposited today if the rate of interest is 82 %

       compounded annually? (Correct within 0.005)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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25.  AJP Corporation has to pay $50 million in the 20th year. It is required to set up an account to

       pay off the principal at maturity (answers correct within 50 dollars)( ROI = .10)

 

.      What will be the level payments each year?

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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Subject Mathematics
Due By (Pacific Time) 03/24/2014 12:00 pm
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