Question

1) ABC Company borrows $100,000 for 3 years with a stated annual rate of 10%. What is the amount of interest paid computed as compound interest

2)      ABC Company invests $1,000 for 10 years at 8% with interest compounded annually. ABC will receive the entire amount (principal plus interest) at the end of the 10-year period. What is the future value of this single sum, using the formula approach?

3) ABC Company is considering investing in a piece of land it believes it can sell in 10 years for $200,000. The relevant interest rate is 8% with annual compounding. What should ABC Company pay for this land today (specifically, what is the present value of this investment)?

4) ABC Company will receive $1,000 semiannually for the next 10 years, with the first amount received at the end of the first semiannual period. The interest rate is 8%. Using the table approach, what is this stream of future cash flows worth today (to the nearest dollar)?

5) ABC Company borrows $100,000 at an interest rate of 10% today and will repay this amount by making 10 semiannual payments. Payments begin in six months. Using the table approach, what is the amount of the payments that ABC Company will need to make (to the nearest dollar)?

Answer 1

for formulas and calculations, refer to the image below -

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