ADMS 3220 Midterm: Midterm Review Solutions.F12.pdf
11 Apr 2013
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Time value of money: you have retired early from your successful finance career and are donating. This money will be used to pay for scholarships totaling ,000 each year forever. If the first scholarships are awarded (and paid) today, what is the interest rate that is being earned on your donation: 5. 24%, 6. 64, 7. 11, 7. 66, 8. 11% The formula for a regular perpetuity is pv= c/r. The formula for a perpetuity due is pv = c + c/r. The interest rate is 6. 5%, compounded annually: ,490, ,632, ,991, ,274, ,100. Pmt ordinary annuity = 20,000; n= 50; i/y = 6. 5%; fv = 0 , comp pv. Pv annuity due = 294,490. 41 x 1. 065 = 313,632. 29. The effective annual rate is 6% and payments will begin at the end of the first quarter: ,000. 56, ,340. 77, ,514. 06, ,854. 02, ,999. 14. Pmt= 300; n=4, fv = 0; i/y = 1. 467, comp pv pv1 = ,157. 25.
