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Assignment 3

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sultanizarifullah
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3 views

Assignment 3

Uploaded by

sultanizarifullah
Copyright
© © All Rights Reserved
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Answers

1
PV?
rate 12% 0.03
nper 25 * 4 100
pmt 100
fv 0
type 1

PV $ 3,254.69

House Price $ 150,000


Down Payment $ 20,000
Loan $ 130,000 PV
Annual Rate 5%
Monthly Rate 0.00416666667 rate
Loan Term 360 Month
FV 0
Type 0

PMT ? $ 697.87

3
How long it will take to clear the payment? nper
Car Price $ 30,000 FV?
Down Payment $ 3,000 nper
Loan $ 27,000 pmt
Monthly Pay $ 500 PV
Annual Interest 6% type
Monthly Interest 0.005 rate

NPER 63.0993735377 FV

PV ?
Annual Rate 10%
Quarterly Rate 0.025
Quarterly Payment $ 100
PV $ 4,000

Present value of the initial5 cash flows from year 1 to


year 4
Year 1 $ (45,000)
Year 2 $ (30,000)
Year 3 $ 80,000
Year 4 $ 50,000
Year 5 $ 70,000 Yearly
Cost of Capital 10%

Present Value of Perpetuity Starting in Year 5


C or Cash flow $ 70,000
rate 10%
PV ( perpetuity ) ? $ 700,000 PV

Present Value $ (506,662.80)

a. $1200/month
yearly interest rate 12%
time 5
month 60
monthly rate 0.01
pmt 1200
PV $ 54,485.51

b. $2,240.69/quarter for 7 years

Quarterly rate 0.03


year 7
Quarters 28
pmt 2240.69

PV $ 43,305.89

c. Prepetuity
r 12%
Pmt 6538.27

PV 54485.58
I found PV as best way to assess the investment. There
are other ways including using EAR. In here, both
option A and C has the highest PV. Both can be a great
option for the investment.
12% / 4 = 3% = 0.03

Beginning Payment

Down Payment after Two Years?

24
500
27000
0
0.005

$ (17,717.34) Payment
Present Value of the year 1 to 4
$ 40,909.09
$ 24,793.39
$ (60,105.18)
$ (34,150.67)

Discount the perpetuity back to Year 0 (today)

$ (478,109.42)

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