Finance 325 Introduction to Financial Management Assignment 1 Spring 2014

| June 6, 2016

Finance 325

Introduction to Financial Management

Spring 2014

Assignment 1

Remember: you will be expected to show your all work. (3 points for each question)

1. What is the present value of $1,000 to be received 8 years from now? The interest rates are 10%.

2. We bought a stock for $45.85 four years ago and we can sell it for $59.13 today. The stock does not pay dividends. What annual rate of return have we earned?

3. What is the accumulated sum if $1,000 is deposited at the end of every year for 5 years into an account compounded annually at 5%?

4. Now, work the problem 3 assuming an annuity duerather than an ordinary annuity

5. You buy a house for $250,000. You put $50,000 down, and get a 30-year fixed 6.5 percent loan for the rest. How much is your monthly payment?

6. How long will it take to pay off a $27,000 loan with a 14 percent APR which compounds monthly? The payment is $450 per month

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