In: Finance
1) Postal Express is considering the purchase of a new sorting machine. The sales quote consists of quarterly payments of $37,200 for six years at 7.6 percent interest. What is the purchase price? A) $728,729.00 B) $763,441.00 C) $777,987.00 D) $711,633.00 E) $766,237.00
9) Industrial Tools owes you $48,600. This amount is seriously delinquent, so you have offered to accept weekly payments for one year at an interest rate of 3 percent to settle this debt in full. What is the amount of each payment assuming there are 52 weeks in a year?
A) $940.00
B) $929.00
C) $919.00
D) $910.00
E) $948.00
3) Karley's setting aside $32,000 each quarter, starting today, for the next three years for an expansion project. How much money will the firm have at the end of the three years if it can earn an average of 4.54 percent on its savings?
A) $412,091.00 B) $418,012.00 C) $413,806.00 D) $413,542.00 E) $417,116.00
Q1) | Present Value Of An Annuity | |||||
= C*[1-(1+i)^-n]/i] | ||||||
Where, | ||||||
C= Cash Flow per period | ||||||
i = interest rate per period =7.6%/4 =1.90% | ||||||
n=number of period =6*4 =24 | ||||||
= $37200[ 1-(1+0.019)^-24 /0.019] | ||||||
= $37200[ 1-(1.019)^-24 /0.019] | ||||||
= $37200[ (0.3635) ] /0.019 | ||||||
= $711,633 | ||||||
Correct Option: D.711633 | ||||||
Q2) | Weekly payment = [P x R x (1+R)^N]/[(1+R)^N-1] | |||||
Where, | ||||||
P= Loan Amount | ||||||
R= Interest rate per period =3%/52 = 0.057692308% | ||||||
N= Number of periods =1*52 =52 | ||||||
= [ $48600x0.00057692308 x (1+0.00057692308)^52]/[(1+0.00057692308)^52 -1] | ||||||
= [ $28.038461688( 1.00057692308 )^52] / [(1.00057692308 )^52 -1 | ||||||
=$948 | ||||||
Correct Answer =E) $948.00 | ||||||
Q3) | Future Value of an Annuity Due | |||||
= C*[(1+i)^n-1]/i] * (1+i) | ||||||
Where, | ||||||
c= Cash Flow per period | ||||||
i = interest rate per period | ||||||
n=number of period | ||||||
= $32000[ (1+0.01135)^12 -1 /0.01135] * (1 +0.01135) | ||||||
= $32000[ (1.01135)^12 -1 /0.01135] * 1.01135 | ||||||
= $32000[ (1.145 -1 /0.01135] * 1.01135 | ||||||
= $413,542.73 | ||||||
Correct Answer =D) $413,542.00 | ||||||