# Naalai Fin 370 Week 2 Team Assignment

QUESTION AND PROBLEM SETS3r = (FV/PV) ^1/t -11. r = (297/181) ^1/4 -1 = (1.641) ^1/4 -1 = 1.1318 -1 = 0.1318 or 13.18%2. r = (1,080/335) ^1/18 -1 = 1.0672 -1 = 0.0672 or 6.72%3. r = (185382/48000) ^1/19 -1 = (3.862)^1/19 -1 = 1.0737 -1 = 0.0737 or 7.37%4. r = (531616/40353) ^1/25 -1 = (13.174)^1/25 -1 = 1.1086 -1 = 0.18086 or 10.86%Chapter 6Question 2. Present Value and Multiple Cash Flows [LO1] Investment X offers to pay you $4,700 per year for eight years, whereas Investment Y offers to pay you $6,700 per year for five years. Which of these cash flow streams has the higher present value if thediscount rate is 5 percent? If the discount rate is 15 percent?PVA = C ({1-[1/(+r)^t]}/r)A 5% interest rateX at 5%: PVA = 4700 { [1- (1/1.05)^8 ] /.05} = $30377.10Y at 5%: PVA = 6700 { [1- (1/1.05)^5 ] /.05} = $29007.49At 15% interest:X at 5%: PVA = 4700 { [1- (1/1.15)^8 ] /.15} = $21090.41Y at 5%: PVA = 6700 { [1- (1/1.05)^5 ] /.15} = $22459.44CorrectQuestion 20. Calculating Loan Payments [LO2, 4] You want to buy a new sports coupe for $79,500, and the finance office at the dealership has quoted you an APR of 5.8

QUESTION AND PROBLEM SETS2Ch. 5 Questions 3 & 4 (Question and Problems section)3.Calculating Present Values[LO2]For each of the following, compute the present value:(Excel Sheet)4. Calculating Interest Rates[LO3]Solve for the unknown interest rate in each of thefollowing:(Excel Sheet)Ch. 6 Questions 2 & 20 (Questions and Problems section)2. Present Value and Multiple Cash Flows[LO1]Investment X offers to pay you $4,700 per yearfor eight years, whereas Investment Y offers to pay you $6,700 per year for five years. Which of these cash flow streams has the higher present value if the discount rate is 5 percent? If the discount rate is 15 percent? (Excel Sheet)20.Calculating Loan Payments[LO2, 4]you want to buy a new sports coupe for $79,500, and the finance office at the dealership has quoted you an APR of 5.8 percent for a 60-month loan to buy the car. What will your monthly payments be? What is the effective annual rate on this loan?