Print FCF 9th Edition Chapter 06

8/2/2019 Print FCF 9th Edition Chapter 06

1/84

Chapter 6Question 6

nput area:

Annual savings 73,000

# of years 8

nterest rate on annuity 8.5%

Output area:

Present value 411,660.36

Question 8

nput area:

Desired amount 90,000

# of years 10

nterest rate 6.8%

Output area:

Annual deposit 6,575.77

Question 10,11

nput area:


nterest rate 7.20%

Cost of policy 375,000


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Output area:


Required interest rate 6.67%

Question 14

nput area:

Output area:

Stated rate (APR) of times per yea Effective rate )First National Bank 14.2% 12 15.16%

First United Bank 14.5% 2 15.03%

Question 15

nput area:

Output area:

Stated rate (APR) of times per yea (Effective rate )

14.85% 365 16%

The borrower is actually paying annualized interest of

16% per year; not the 14.85% reported on the loan contract.

Question 21


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nput area:

Monthly payment 500

Discount rate 1.3%

Current balance 18,000.00

Output area:

# of months until paid off 48.86

Question 30

nput area:

Effective annual rate 17%

# of times compounded 12

Output area:

APR 15.80%

Effective rate per period 1.32%

Question 31


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nput area:

nterest rate first six month 1.50%

nterest rate thereafter 18%

# of times compounded 12

Balance transferred 5,000

Output area:

Accrued interest 508.35

Question 37

nput area:

Payment today 1,000,000

Length of payments 30

Annual increase 5%

Return 8%

Output area:

Present value of future pay 19,016,563.18

Question 42


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nput area:

Number of years 30

Price of house 240,000

APR 6.35%

Monthly payment 1,150

Output area:

Present value of payments 184,817.42

Remaining principal 55,182.58

Balloon payment 368,936.54


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Chapter 6Problems 1-78

Input boxes in tanOutput boxes in yellow

Given data in blue

Calculations in red

Answers in green

NOTE: Some functions used in these spreadsheets may require

the "Analysis ToolPak" or "Solver Add-In" be installed in Excel

To install these, click on the Office button

then "Excel Options," "Add-Ins" and select

"Go." Check "Analyis ToolPak" and"Solver Add-In," then click "OK."


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that


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Chapter 6Question 1

Input area:

Output area:

Discount rate 10%

Year (Cash flow )

1 950

2 1,040

3 1,130

4 1,075

3,306.37


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Chapter 6Question 2

Input area:

Discount rate 5%

# of years for 9

# of years for Y 6

Payment for X 6,000

Payment for Y 8,000

Output area:

Value of X 42,646.93

Value of Y 40,605.54


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Chapter 6Question 3

Input area:

Output area:

Discount rate 8%

Year (Cash flow )

1 940

2 1,090

3 1,340

4 1,405

5,307.71


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Chapter 6Question 4

Input area:

Payment per year 5,300

# of years 15Required rate of retu 7%

Output area:


PV (forever) 75,714.29


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Chapter 6Question 5

Input area:

Initial investment 34,000

Interest rate on annui 7.65%# of years 15

Output area:

Annuity payment 3,887.72


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Chapter 6Question 6

Input area:

Annual savings 73,000

# of years 8Interest rate on annuity 8.5%

Output area:



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Chapter 6Question 7

Input area:

Annual deposit 4,000

# of years 20Interest rate on annuit 11.2%

Output area:

Future value 262,781.16


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Chapter 6Question 8

Input area:


# of years 10Interest rate 6.8%

Output area:

Annual deposit 6,575.77


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Chapter 6Question 9

Input area:



Output area:

Loan payment 9,440.02


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Chapter 6Question 10,11

Input area:


Interest rate 7.20%

Cost of policy 375,000

Output area:


Required interest rate 6.67%


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Chapter 6Question 12

Input area:

Output area:

Stated rate (APR) # of times per year (Effective rate )

8% 4 8.24%

16% 12 17.23%

12% 365 12.75%

15% (Infinite ) 16.18%


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Input area:

Output area:

Stated rate (APR) # of times per year (Effective rate )

8.42% 2 8.60%

18.20% 12 19.80%

8.99% 52 9.40%

15.27% (Infinite ) 16.50%


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Input area:

Output area:

Stated rate (APR) # of times per year Effective rate )

First National Ban 14.2% 12 15.16%

First United Bank 14.5% 2 15.03%


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Input area:

Output area:

Stated rate (APR) (# of times per year (Effective rate )

14.85% 365 16%

The borrower is actually paying annualized interest of

16% per year; not the 14.85% reported on the loan contract.


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Input area:

Deposit 2,100


# of times compounded per ye 2

Output area:

Future value $8,505.93


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Input area:

Interest rate 9.30%

# of times compounded per ye 365Deposit 4,500

# of years 5

Output area:

Future value $7,163.64


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Input area:

Future value of investment 58,000

# of years 7Discount rate 10%


Output area:

Present value of investment $28,804.71


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Input area:

Interest rate 30%

Compounding period 12

Output area:

APR 360.00%

EAR 2229.81%


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Input area:

Future value of investment 68,500

Discount rate 6.9%# of years 5


Output area:

Payment 1,353.15

Effective interest rate 7.12%


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Input area:

Present value 3

Future value 4

Output area:

Interest rate per wee 33.33%

APR 1733.33%

EAR 313916515.69%


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Input area:


Contract price 95,000

Output area:

Monthly return 1.89%

APR 22.74%

EAR 25.26%


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Input area:

Monthly deposit 300

# of times compounded per ye 12Interest rate on annuity 10%

# of years 30

Output area:

Future value of annuity 678,146.38


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Input area:

Quarterly withdrawal 2,300

# of times compounded per ye 4# of years 4

Interest rate per quarter 0.65%

Output area:

Amount needed today 34,843.71


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Input area:

Output area:

Discount rate 11%

# of times compounde 4

Year (Cash flow )

1 725

2 980

3

4 1,360

$2,320.36

EAR 11.46%


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Input area:

Output area:

Discount rate 8.45%

Year (Cash flow )

1 1,650

2

3 4,200

4 2,430

6,570.86


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Input area:

Interest rate 7%

# of years 10

Output area:

First Complex Bank interest rate 5.45%


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Input area:

Effective annual rate 17%

# of times compounde 12

Output area:

APR 15.80%

Effective rate per perio 1.32%


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Input area:

Interest rate first six mont 1.50%

Interest rate thereafter 18%# of times compounded 12

Balance transferred 5,000

Output area:

Accrued interest 508.35


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Input area:

Monthly stock investme 700

Monthly bond investme 300Stock return 11%

Bond return 6%

Years to save 30

Retirement return 9%

Retirement years 25

Output area:

FV of stock account 1,963,163.82

FV of bond account 301,354.51

Total account FV 2,264,518.33

Monthly withdrawal 19,003.76


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Input area:

Output area:

Interest per month (# of years ) (Amount invested )(Future value )

1.17% 1 1 $1.15

1.17% 2 1 $1.32


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Input area:

Amount needed 1,000,000

Years to save 40Return 12%

Years to wait before beginning -

Output area:

Monthly deposit starting now 85.00


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Input area:

Present value 1

Future value 3Number of periods 1

Output area:

Effective annual rate 200.00%

Annual percentage rate 126.43%

Quarterly return 31.61%


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Input area:

Amount per year in option 1 95,000

Amount per year in option 2 70,000

Signing bonus in option 2 45,000

Interest rate 10%


Output area:

EAR 10.47%

Present value of option 1 163,839.09

Present value of option 2 165,723.54


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Input area:

Payment today 1,000,000

Length of payments 30

Annual increase 5%

Return 8%

Output area:

Present value of future payme 19,016,563.18


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Input area:

Current salary 50,000

Percent of salary to deposit 5%

Return 11%

Salary increase 4%

Deposit length 40

Output area:

Next year's salary 52,000

Next year's deposit 2,600

Present value deposits 34,399.45

Future value of deposits 2,235,994.31


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Input area:

# of years 15

Annuity payment per yea 9,000Interest rate 15%

Output area:

Value of investment 52,626.33

Present value falls as rincreases, and rises as rdecreases.

Future value rises as rincreases, and falls as rdecreases.


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Input area:

Monthly payment 340.00

Interest rate 6%Future value of account 20,000

Output area:

Number of payments 51.69


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Input area:

Price of sailboat 73,000

Monthly payment 1,450Number of months 60

Output area:

Monthly rate 0.594%

APR 7.13%


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Input area:

Number of years 30

Price of house 240,000APR 6.35%


Output area:

Present value of payments 184,817.42

Remaining principal 55,182.58

Balloon payment 368,936.54


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Input area:

PV of cash flows 6,550

Year Cash flow1 1,700

2 -

3 2,100

4 2,800

Discount rate 10%

Output area:

Year (PV )

1 1,545.45

2 -

3 1,577.76

4 1,912.44

Total 5,035.65

PV of missing CF 1,514.35

Value of missing C 1,832.36


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Input area:

First payment 1,000,000

Annual increas 500,000

Discount rate 9%

Output area:

Year (Payments ) (Present Value )

0 1,000,000 1,000,000.00

1 1,500,000 1,376,146.792 2,000,000 1,683,359.99

3 2,500,000 1,930,458.70

4 3,000,000 2,125,275.63

5 3,500,000 2,274,759.85

6 4,000,000 2,385,069.31

7 4,500,000 2,461,654.10

8 5,000,000 2,509,331.40

9 5,500,000 2,532,352.79

10 6,000,000 2,534,464.84

Present value 22,812,873.40


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Input area:

Number of years 30

Percentage of pruchase pric 80%Price of warehouse 2,900,000


Output area:

Amount of loan 2,320,000

Interest rate per month 0.560%

APR 6.72%

EAR 6.93%


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Input area:

Selling price 165,000

# of years until sale 4Production cost 94,000

Discount rate 13.0%

Output area:

Present value of sale 101,197.59

Profit (loss) 7,197.59

Breakeven rate 15.10%


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Input area:

Annual payment 4,000

Discount rate 10%Year of first payment 8

Year of last payment 25

Output area:

PV at beginning of payments 32,805.65

Value today 16,834.48


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Input area:


# of years 15

Interest rate 1 11%

# of years 7

Interest rate 2 7%

# of years 8

Output area:

Value today of interest rate 1 payments 87,604.36

Value of interest rate 2 payments at rate cha 110,021.35

Value today of interest rate 2 payments 51,120.33

Total present value of the annuity 138,724.68


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Input area:

Investment A:

# of years 15


Interest rate 8.50%

Investment B:

# of years 15

Interest rate 8%

Output area:

Future value of investment A 434,143.62

Lump sum needed 130,761.55


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Input area:

Interest rate 6.2%

Year to find value 7

Amount of payment 3,500

Year of first perpetual payment 15

Output area:

Present value of perpetual strea 56,451.61

Present value at requested year 37,051.41


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Input area:

Quoted interest rat 16%

Amount borrowed 25,000

Interest per year 4,000

Monthly payment 2,416.67

Periods/year 12

Output area:

Monthly rate 2.361%

APR 28.33%

EAR 32.31%


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Input area:

# of years 5

Amount of semiannual paymen 7,000

# of years until first payment 8.50

Discount rate 10%

Compounding periods per yea 12

Year to find present value -

Output area:

Semiannual interest rate 5.105%

PV of annuity at year 8 53,776.72

Effective annual rate 10.47%

Present value at requested ye 24,243.67


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Input area:


# of years 5

Discount rate 11%

Output area:

a) PV of ordinary annuity 36,958.97

PV of annuity due 41,024.46

b) FV of ordinary annuity 62,278.01

FV of annuity due 69,128.60


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Input area:

Value of lease contract 68,000

# of months 60

APR 7.85%

Output area:

Monthly payment $1,364.99


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Input area:

Loan amount 42,000

Interest rate 8%

Loan term 5

Output area:

Loan paymen $10,519.17

Year Beginning balance Total payment Interest paid Principal paidEnding balanc

1 42,000.00 10,519.17 3,360.00 7,159.17 34,840.83

2 34,840.83 10,519.17 2,787.27 7,731.90 27,108.92

3 27,108.92 10,519.17 2,168.71 8,350.46 18,758.47

4 18,758.47 10,519.17 1,500.68 9,018.49 9,739.97

5 9,739.97 10,519.17 779.20 9,739.97 0.00

Total interest paid over life of loan = 10,595.86


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)


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Input area:

Loan amount 42,000

Interest rate 8%

Loan term 5

Output area:

Loan paymen $8,400.00

Year Beginning balance Total payment Interest paid Principal paidEnding balanc

1 42,000.00 11,760.00 3,360.00 8,400.00 33,600.00

2 33,600.00 11,088.00 2,688.00 8,400.00 25,200.00

3 25,200.00 10,416.00 2,016.00 8,400.00 16,800.00

4 16,800.00 9,744.00 1,344.00 8,400.00 8,400.00

5 8,400.00 9,072.00 672.00 8,400.00

Total interest paid over life of loan = 10,080.00


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)


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Input area:

Years until retirement 30

Monthly retirement income 20,000

Years in retirement 25

Years until cabin purchase 10

Cabin price 380,000

Inheritance 900,000

Monthly savings for first years 2,500

Pre-retirement EAR 10%

Retirement EAR 7%

Output area:

Pre-retirement APR 9.57%

Retirement APR 6.78%

Savings value until cabin purcha 499,659.64

Savings after cabin purchase 119,659.64

FV of initial savings 805,010.23

PV of retirement spending 2,885,496.45

PV of inheritance 165,824.26

Amount needed at retirement 3,051,320.71

Retirement shortfall 2,246,310.48

Savings needed per month 3,127.44


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Input area:

Years for lease 3

Car price 32,000

Payment today 99

Monthly lease payment 450

Loan rate 7%

Resale price 23,000

Output area:

PV of lease payments 14,672.91

PV of resale price 18,654.82

PV of purchase 13,345.18

You should (Buy )

the car since the PV is lower.

Breakeven present value 17,327.09

Breakeven resale price $21,363.01


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Input area:

Year

0 7,000,000

1 4,500,000

2 5,000,000

3 6,000,000

4 6,800,000

5 7,900,000

6 8,800,000

Requested signing bonus 9,000,000

Requested salary increase 1,400,000

Interest rate 5.5%

Compunding periods 365

Output area:

EAR 5.65%

PV of salary offer 38,610,482.57

PV of salary with increase 40,010,482.57

Effective quarterly interest ra 1.384%

Quarterly salary $1,527,463.76


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Input area:

Amount of loan 25,000

# of years 1

APR 15%

Output area:

Amount received 21,250.00

EAR 17.65%


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Input area:

Salary for 2 years ago 47,000

Last year's salary 50,000

Future salary 55,000

Years for future salary 5

Pain and suffering 100,000

Court costs 20,000

EAR 8%

Output area:

APR 7.72%

Value 1 year ago of salary 2

years ago 48,699.39

Value today of salary 2 yrs a 52,595.34

Value today of last year's sal 51,807.86

Value of next 5 year's salary 227,539.14

Total value awarded 451,942.34


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Input area:


# of years 1

APR 8%

Points 3%

Output area:

EAR 11.34%


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Input area:


# of years 1

APR 11%

# of points 2%

Output area:

EAR 13.27%

The effective rate is not affected by the loan amount,

since it drops out when solving forR.


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Input area:

# of years 30


Interest rate 6.80%

Fees 2,300

Output area:

Refundable fee:


Monthly interest 0.5745%

APR 6.89%

EAR 7.12%

Nonrefundable fee:

APR 6.80%

EAR 7.02%


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Input area:


# of years 3

Interest rate 14%

Output area:

Total repayment 1,481.54

Monthly payment 41.15

Monthly interest 2.30%

APR 27.61%

EAR 31.39%

It's called add-on interest because the interest amount

of the loan is added to the principal amount of the loan

before the loan payments are calculated.


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Input area:

# of years until retirement 30

Annual withdrawal 105,000

# of years to withdraw 20

Interest rate 7%

Employer contribution 1,500

Trust fund distribution 150,000

Years until distribution 20

Output area:

a. Present value of withdrawals 1,112,371.50

Annual deposit until retirement 11,776.01

b. Present value in lump sum 146,129.04

c. Future value of trust fund depos 295,072.70

Total annual deposit necessary 8,652.25

Friend's annual deposit 7,152.25


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Input area:

Amount of debt 10,000

Interest rate on current card 19.8%

Interest rate on new card 6.2%

Planned monthly payment 200

Transfer fee 2%

Output area:

# of months to pay off current car 106.50

# of months to pay of new card 57.99

Difference 48.51

Amount of bill with fees 10,200

# of months with fees 59.35


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Input area:

Payout at retirement 500,000

# of years until retirement 65

Year (Payment )

1 900

2 900

3 1,000

4 1,000

5 1,100

6 1,100

Interest rate 1 12%

# of years 6

Interest rate 2 8%

# of years 59

Output area:

YearValue at Year 6 )

1 1,586.11

2 1,416.17

3 1,404.93

4 1,254.40

5 1,232.00

6 1,100.00

Total value at year 6 7,993.60

Total value at year 65 749,452.56

The policy is not worth buying; the FV of

the policy is less than the payout at retirement.

We could also compare the PV of the two

cash flows. If we compare the PV:

Value of deposits 4,049.81


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Value of payment from

insurance company 2,701.84

Either way, we still choose the same policy.


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Input area:


APR 8.1%

# of years 30

# of years until balloon payment 8

Output area:


# of payments left after balloon payme 264

Total amount of balloon payment 683,700.32


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Input area:


# of years 6

Annual payout 20,000

# of years 4

Output area:

Year (Cash flow )

1 (9,000)

2 (9,000)

3 (9,000)

4 (9,000)

5 (9,000)

6 (9,000)

7 20,000

8 20,000

9 20,000

10 20,000

Breakeven rate 8.07%


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Input area:

Plan X:


# of years (In perpetuity )

Plan Y:

Annual payout 28,000

# of years 20

Output area:

Discount rate needed 6.46%


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Input area:

Years until retirement 40

Next year's salary 40,000

Salary growth rate 3%

Investment return 11%

Desired retirement value 2,000,000

Output area:

PV of retirement value 30,768.82

Amount to save next year 2,591.56

Pecentage of salary 6.48%


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Input area:

Weekly interest rat 7%

# of weeks 1

c. Loan amount 100

Loan proceeds 68.92

Loan payments 25.00

Output area:

a. APR 364.00%

EAR 3272.53%

b. Weekly rate 7.53%

APR 391.40%

EAR 4253.98%

c. Weekly rate 16.75%

APR 871.00%

EAR 314215.72%

Print FCF 9th Edition Chapter 06

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