Question

Please answer A-D

Solve for the unknown quantity in Parts (a) through (d) that makes the equivalent value of cash outflows equal to the equivalent value of the cash inflow, F. a. If F: $ 10,500, G = $600, and N= 6, then i-? b. If F: $10,500, G: $600, and i: 4% per period, then N? c. If G-$900, N-12, and i= 8% per period, then F= ? d. If F: $7,000, N: 6, and i-8% per period, then G ? Click the icon to view the accompanying cash-flow diagram Click the icon to view the interest and annuity table for discrete compounding when 4% per year. Click the icon to view the interest and annuity table for discrete compounding when-8% per year. a. The interest rate, i, is %. (Round to one decimal place.)

Answer 1

a) Fv(annuity) = Annity[(1+r)^n-1/r] 10500=600[(1+r)^6-1/r] [(1+r)^6-1/r] = 17.5 Assuming r = 43% [(1.43)^6-1/0.43] =17.5 Thus r = 43%

b) Fv(annuity) = Annity[(1+r)^n-1/r] 10500=600[(1+4%)^n-1/0.04] [(1.04)^n-1/0.04] = 17.5 Assuming 13.55 [(1.04)^13.55-1/0.04] =17.5 Thus N = 13.55 Years

c) Fv(annuity) = Annity[(1+r)^n-1/r] =900[(1+8%)^12-1/0.08] =900[(1.08)^12-1/0.08] =900[18.97712646] =17079.4138$

d) Fv(annuity) = Annity[(1+r)^n-1/r] 7000=G[(1+8%)^6-1/0.08] 7000=G[(1.08)^6-1/0.08] 7000=G[7.3359] G = 954.2077$