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Sample Excel Quiz #1B/Test #1 Question Problems in Business Finance 382, Test 1, Q12., Fall 2009 Q2a. Your old college roomma
What are the three approaches to solving this problem?
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Answer #1

Answer: We should accept this investment decision as the required rate of return is 15% annually and by accepting this investment 15% interest is being received annually. By giving $35000 today we will receive six installment of $7456.57 which include interest component.

Detailed solution is being provided below:

A B C D E F
5 Q2(a) Finding Semi annual repayment by taking 15% rate of return
6 m #Yrs Arate PV PMT FV
7 2 3 15% $ 35,000.00 $7,456.57 $           -  
EXACT EXCEL FUNCTION
=PMT(C7/A7,A7*B7,-D7,,0)
A B C D E F
9 Q2(b) Finding present value
10 m #Yrs Arate PV PMT FV
11 2 3 15% ($35,000.0) $ 7,456.57 $           -  
EXACT EXCEL FUNCTION
=PV(C11/A11,A11*B11,E11)
A B C D E F
13 Q2(c) Finding Interest Rate
14 m #Yrs Arate PV PMT FV
15 2 3 15.00% $    35,000.00 $ 7,456.57 $           -  
EXACT EXCEL FUNCTION
=RATE(A15*B15,E15,-35000)*2
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