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# Calculating rate of sales increase, annual payment, PV...

1. A corporation's 1995 sales were \$ 10,794,625. Sales were \$5 million 10 years earlier. To the nearest percentage point, at what rate have sales been growing?

2. If you buy a factory for \$100,000 and the terms are 10% down, the balance of \$90,000 to be paid off over 8 years at a 8% rate of interest on the unpaid balance, what are the 8 equal annual payments?

3. As a winner of a lottery you are going to receive \$10,000 every year forever, starting one year from today. If the appropriate discount rate is 8%, what is the present value of the award cash flows?

4. You deposit \$100 in a savings account that pays 10% interest compounded annually. How much would you have in your account at the end of 7 years?

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1. A corporation's 1995 sales were \$ 10,794,625. Sales were \$5 million 10 years earlier. To the nearest percentage point, at what rate have sales been growing?

Using compound annual growth rate:
\$5,000,000 (1 + g)10 = \$10,794,625
\$10,794,625 / \$5,000,000 = 2.1589
(2.1589)1/10 = 1.080
1.080 - 1 = 0.08 ...

#### Solution Summary

This solution is comprised of detailed calculations of the following:

1. A corporation's 1995 sales were \$ 10,794,625. Sales were \$5 million 10 years earlier. To the nearest percentage point, at what rate have sales been growing?

2. If you buy a factory for \$100,000 and the terms are 10% down, the balance of \$90,000 to be paid off over 8 years at a 8% rate of interest on the unpaid balance, what are the 8 equal annual payments?

3. As a winner of a lottery you are going to receive \$10,000 every year forever, starting one year from today. If the appropriate discount rate is 8%, what is the present value of the award cash flows?

4. You deposit \$100 in a savings account that pays 10% interest compounded annually. How much would you have in your account at the end of 7 years?

\$2.19