Question

Question 6: Determine the discounted value now of $7000.00 due in forty-four months at 6.5% compounded quarterly Question 7: Two debt payments, the first in the amount of $3450.00 due today, and the second in the amount of $2700.00 due in 10 months with interest at 9.6% p.a. compounded quarterly, are to be settled by a payment of S4400.00 nine months from now and a final payment in 21 months. Determine the size of the final payment if the money is worth 13.12% p.a. compounded monthly Question 8: At what nominal rate of interest compounded semi-annually will $110500 earn $5500 interest in six years? Question 9: A principal of $7450.00 compounded monthly amounts to $6800.00 in 6.25 years. What is the nominal annual rate of interest? Question 10 At what nominal rate of interest compounded quarterly Will $10000 earn $4700.00 interest in five years?

PLEASE SOLVE 6 TO 10 QUESTIONS

Answer 1

QUESTION 6 solution FORMULA TOTAL VALUE= AMOUNT (1+i)^n where TOTAL VALUE =7000, i= 6.5/4 = 1.625% n=14.67 (44 MONTHS DIVIDE BY 3 i.e MONTHS IN A QUARTER) 7000=Amount x (1+0.01625)^14.67 ANS Amount = $5,526.16 QUESTION 7 SOLUTION GIVEN DATA TWO DEBT DUE TODAY - 3450 DUE IN 10 MONTHS - 2700,WITH INTEREST AT 9.6% COMPOUNDED QUARTERLTY FIRST PAYMENT IN 9 MONTHS OF $4400 FINAL PAYMENT - ? OPPORTUNITY COST OF MONEY = 13.12% COMPOUNDED MONTHLY CALCULATION OF PRINCIPAL VALUE REPAID WITH FIRST INSTALLMENT TOTAL VALUE = AMOUNT X(1+i)^N 4400 = AMOUNT X (1+2.4%)^3 AMOUNT = 4097.8193 1.073741824 4097.819328 PRINCIPAL AMOUNT OUTSTANDING AFTER 9 MONTHS = 3450+2700- 4097.8193 =2052.1807 TOTAL VALUE OF DEBT FOR FINAL PAYMENT, TOTAL DEBT VALUE=2052.1807(1+2.4%)^4 FINAL REPAYMENT AMOUNT =2256.39 CALCULATION OF AMOUNT REQUIRED FOR DEBT SETTLEMENT TOTAL MONEY REQ = 2256.39 X(1+0.01093)^12 FINAL PAYMENT = $2570 THE FINAL SUM REQUIRED TO PAY OFF THE DEBT IS $ 2570 QUESTION 8 SOLUTION N=12 i=? AMOUNT=110500 TOTAL VALUE AFTER 6 YEARS =116000 TOTAL VALUE = AMOUNT X(1+i)^N

QUESTION 8 SOLUTION N=12 i=? AMOUNT=110500 TOTAL VALUE AFTER 6 YEARS =116000 TOTAL VALUE = AMOUNT X(1+i)^N 116000 = 110500 X (1+i)^12 i=0.4056% BUT I IS FOR 6 MONTHS HENCE INTEREST RATE PER ANNUM IS 0.8112% (0.4056*2) QUESTION 9 SOLUTION PRINCIPAL=7450 INTEREST =6800 TOTAL VALUE=14250 YEARS=6.25 N=6.25*12 =75 FORMULA TOTAL VALUE = PRINCIPAL (1+i)^75 14250 = 7450 (1+ i)^75 i = 0.8685% RATE OF INTEREST = 10.4217% (0.8*12) SOLUTION COMPOUNDED QUARTERLY PRINCIPAL = $10000 INTEREST = $4700 NUMBER OF YEARS = 5 i = ? N=20 PRINCIPAL =10000 TOTAL VALUE = 14700 FORMULA TOTAL VALUE = PRINCIPAL (1+i)^75 14700 = 10000 X (1 + i)^20 1 = 0.01945 RATE OF INTEREST PER ANNUM = 7.7799%