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Finance Homework Help
FINANCIAL MANAGEMENT CLASS-200 WORDS EACH
UNIT III
Question 1
Much to your surprise, you were selected to appear on the TV show, "The Price is Right." As a result of your prowess in identifying how many rolls of toilet paper an average American family keeps on hand, you win the opportunity to choose one of the following: $2,000 today, $10,000 in 10 years, or $31,000 in 29 years. Assuming you can earn 12% on your money, which should you choose?
What is the future value of $500 a year for 9 years compounded annually at 10%? What is the future value of $900 for nine years compounded annually at 10%?
To buy a new house, you must borrow $150,000. To do this, you take out a $150,000, 20-year, 10% mortgage. Your mortgage payments, which are made at the end of each year (one payment each year), include both principle and 10% interest on the declining balance. What amount will your annual payment be?
Alex Karez has taken out a loan of $180,000 with an annual rate of 10% compounded monthly to pay off hospital bills from his wife’s illness. If the most Alex can afford to pay is $3,500 a month, how long will it take to pay off the loan? How long will it take to pay off the loan if he can pay $4,000 each month? Use five decimal places for the monthly percentage rate in your calculations. If Alex can pay $3,500 a month, how many years will it take to pay off the loan?
Question 2
Caswell Enterprises had the following end-of-year stock prices over the last five years and paid no dividends.
Time |
Caswell |
1 |
$12 |
2 |
9 |
3 |
7 |
4 |
6 |
5 |
8 |
The common stock of Plaxo Enterprises had a market price of $9.45 on the day you purchased it just 1 year ago. During the past year, the stock paid a dividend of $1.43 and closed at a price of $11.66. What rate of return did you earn on your investment in Plaxo's stock? The rate of return you earned on Plaxo's stock is what percent?
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