Homework in BUSSFIN

Pages: 16 (356 words) Published: July 21, 2014
Submitted by: Weslie L. Villejo, TCDP1
Submitted to: Mr. Baylon

5-29.
10.30%
firm

12.75%
bank

2.45%
increase

5-30.

a.
25
60.18
Erika
85.18

25
19.23
Kitty
44.23

b.
($2,985.06)

c. I think its rational because the mutual funds are invested in high quality bonds which reaps a sure 6% per year interest. On the other hand, the 20% average per year interest on the newly issued bio-tech stocks are somehow a bit risky because you can never know whether the new companies will be productive or not or if the stocks will be higher in the coming years.The interest is very enticing but the risk is also high. So, I think it’s a safe bet to invest in the bond.

5-31.

a.
($35,459.51)
b.
$37,232.48

5-32.

1500

1749.60

1889.57

2040.73

2203.99

9383.89

10000.00
Answer
616.11

5-33.

Answer
17708.50

5-34.

a. Loan ammortization schedule, $25,000.00 at 10% for 3 years

Amount borrowed:
$ 25,000.00

Years:

3

Rate:

10%

Payment:
-$10,052.87

Year
Beginning Amount
Payment
Interest
Repayment of Principal
1
$ 25,000.00
$10,052.87
$ 2,500.00
$7,552.87
2
$ 17,447.13
$10,052.87
$ 1,744.71
$8,308.16
3
$ 9,138.97
$10,052.87
$ 913.90
$9,138.97

b.
24.87%
75.13%

17.36%
82.64%

9.09%
90.91%

Interest
Principal

These changes over time because of the payments made yearly.

5-35.

Amount borrowed:
$ 100,000.00

Years:

3

Rate:

7%

Payment:
-$38,105.17

a.
The payment would be $38,105.17.

I can't afford that payment given my annual salary

Amount borrowed:
$ 100,000.00

Years:

30

Rate:

7%

Payment:
-$8,058.64

b.
The payment would be $8,058.64.

Still, I can't afford that payment given my annual salary.

Amount borrowed:
$ 100,000.00

Years:

30

Rate:

7%

Payment:
-$8,058.64

Year
Beginning Amount
Payment
Interest
Repayment of the Principal
Ending Balance
1
$ 100,000.00
$8,058.64
$ 7,000.00
$1,058.64
$ 98,941.36
2
$ 98,941.36
$8,058.64
$ 6,925.90
$1,132.75
$ 97,808.61
3
$ 97,808.61
$8,058.64
$ 6,846.60
$1,212.04
$ 96,596.58

c.
$ 96,596.58

5-36.

a.
50.00
months
b.
12.92
months
c.
37.080

5-38.

$41,651.46
$100,000.00
$20,000.00
Answer$161,651.46

Spreadsheet Problem, 5-41.

Period
PV
Rate

a.
5
$1,000.00
10%

FV=
$1,610.51

b.
Future Value of
$ 1,000.00

FV=1000(1+i)^n

Rates

Periods
0%
5%
20%

0
$1,000.00
$1,000.00
$1,000.00

1
$1,000.00
$1,050.00
$1,200.00

2
$1,000.00
$1,102.50
$1,440.00

3
$1,000.00
$1,157.63
$1,728.00

4
$1,000.00
$1,215.51
$2,073.60

5
$1,000.00
$1,276.28
$2,488.32

c.
Period
Rate
FV

5
10%
$ 1,000.00

PV=
($620.92)

d.
Period
PV
FV

5
$ 1,000.00
$ 2,000.00

Rate=
15%

e.
Population
Expected
Rate

36.5
73
2%

Period=
35.0

f.
Payments
Rate
Period

$1,000.00
15%
5

PV=
$3,352.16

FV=
$13,484.76

g.
Payments
Rate
Period

$1,000.00
15%
5

PV=
$3,854.98
$3,352.16
15%
change

FV=
$15,507.48
$13,484.76
15%
change
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