Money and End

Topics: Money, Payment, Investment Pages: 2 (607 words) Published: December 18, 2013
AD311 Business Finance, Odabasi, Homework 1
Due before class, November 5, 2013
Homework can be done by 2 or 3 students. No individual submissions accepted. Submit your homework electronically to the course TA, Mrs. Çiğdem Vural Yavaş, . Use the template file to do the homework, turning into your own file using the naming convention in the next bullet. All calculations and verbal answers should be on the Excel spreadsheet itself (no additional files submitted). Not every problem will have a template. If this occurs, add a tab to the template file for the missing problem. Naming convention: Submit the homework with the last names of the submitters in alphabetical order: cohen.markovitz.homework1.xlsm. Put the names at a separate tab in the excel file. Other formats will be penalized with a 3 point penalty. Use Getformula to annotate your answers (5 point penalty for unreasonable non-use of this function). Question 1

Irene deposited a total of $400,000 for a period of 5 years in two saving accounts; the first has a 5% annual interest rate and the second has a 7% annual interest rate. The interest in each account is credited to the accounts at the end of each year. At the end of the five year period Irene received a total sum of $529,452 from both accounts. How much did Irene deposit in each of the accounts?

(Hint: You can make use of “Goal Seek” tool for your answer.) Question 2
The following table gives the expected cash flow from three of your assets. All cash flows are received at the end of the year indicated.

The payments on each asset are made at the end of the year, and the annual interest rate is 10%. Which of your assets is the most valuable?
Question 3
You are presented with two options:
Option A – An annual payment of $1,000 for three years at the end of each year, and $1,200 for an additional ten years starting at the end of the fourth year. Option B – A one-time lump-sum payment of $15,000 at the...
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