Financial Decisions for Int'L Managers Chapter 4

Topics: Net present value, Money, Rate of return Pages: 4 (832 words) Published: October 20, 2011
Chapter 4:

(4-9)Find the following values, using the equations, and then work the problems using a financial calculator to check your answers. Disregard rounding differences. a. An initial \$500 compounded for 1 year at 6%

\$530.00
b. An initial \$500 compounded for 2 years at 6%
\$561.80
c. The present value of \$500 due in 1 year at a discount rate of 6% \$471.70
d. The present value of \$500 due in 2 years at a discount rate of 6% \$445.00

(4-11)To the closest year, how long will it take \$200 to double if it is deposited and earns the following rates? a. 7%
10 years
b. 10%
7 years
c. 18%
4 years
d. 100%
1 year

(4-12)Find the future value of the following annuities. The first payment in these annuities is made at the end of Year 1, so they are ordinary annuities. a. \$400 per year for 10 years at 10%
\$6,374.97
b. \$200 per year for 5 years at 5%
\$1,105.13
c. \$400 per year for 5 years at 0%
\$2,000.00
d. Now rework parts a, b, and c assuming that payments are made at the beginning of each year, that is they are annuities due. 1. \$7,012.61
2. \$1,160.38
3. \$2,000.00

(4-13) Find the present value of the following ordinary annuities. a. \$400 per year for 10 years at 10%
\$2,457.83
b. \$200 per year for 5 years at 5 %
\$865.90
c. \$400 per year for 5 years at 0%
\$2,000.00
d. Now rework parts a, b, and c assuming that payment are made at the beginning of each year; that is, they are annuities due. 1. \$2,703.61
2. \$909.19
3. \$2,000.00

(4-14)Find the present values of the following cash flows streams. The appropriate interest rate is 8%.
YearCash Stream ACash Stream B
1\$100\$300
2400400
3400400
4400400
5300100
PVA = \$1,251.25
PVB = \$1,300.32
b. What is the value of each cash flow stream at a 0% interest rate? PVA = \$1,600.00
PVB = \$1,600.00

(4-15)Find the interest rate (or rates of return) in each of the following situations. a....