Share
Explore BrainMass

# finance questions

1- What is the future value for \$1000 compounded annually using each of variable below?

Number of years Interest Rate
5 3.0%
15 12.0%
7 5.0%

2- What is the present value of the following amounts?

Amount to be received in (n) years Discount rate
\$10,000 5 10.0%
\$1,000 3 5.0%
\$20,000 20 8.0%

3- How much do you need to invest now in order to have 2.0 million at the end of 30 years if the interest rate is 10%.
4- You found a valuable oil painting in your attic. You have received two bids for the painting. One bid is for \$1.0 million and the second bid is for \$2.0 million. But you will have to wait 5 years to receive the money. Your investment advisor has informed you that you can earn 12% interest on the \$1.0 million if you choose which is better?
5- What is the market price of the following bonds?

Face amount = \$1000
Coupon rate= 6.00%
Market rate of the similar bonds = 10.00%
Bond maturity date = December 31,2009
Assume the today's date is Jan. 1, 2007

6-Prepare a loan amortization schedule for a auto loan of \$18,000 , 8% 60 months loan. Show only the first year make sure your schedule includes the balance of the loan at the end of the year.

#### Solution Preview

1- What is the future value for \$1000 compounded annually using each of variable below?

Number of years Interest Rate
5 3.0%
15 12.0%
7 5.0%
FV = PV (1+i)n where PV is the present value
FV is the future value
i is the interest rate
n is the period
FV = 1,000(1 + 0.03)5
= 1,159.27
FV = 1,000(1 + 0.12)15
= 5,473.57
FV = 1,000(1 + 0.05)7
= 1,407.10

2- What is the present value of the following amounts?

Amount to be received in (n) years Discount rate
\$10,000 5 10.0%
\$1,000 3 5.0%
\$20,000 20 8.0%
PV = FV/(1 + R)N where PV is the present value
FV is the future value
R is the interest rate
N is the period
PV = 10,000/(1 + 0.10)5
PV = 6,209.21
PV = 1,000/(1 + 0.05)3
PV = 863.84
PV = 20,000/(1 + 0.08)20
PV = 4,290.96

3- How much do you need to invest now in order to have 2.0 million at the end of 30 ...

#### Solution Summary

This solution is comprised of a detailed explanation to answer the present value, future value of the amount given, and calculate bonds price.

\$2.19