Mbs___finance_and_accounting___week_3_homework_answers

WEEK 3: HOMEWORK ANSWERS Homework: Present Value Create graphs showing: Present value of: an expected single payment of $100 received at the end of Year 1, an expected single payment received at the end of Year 2, an expected single payment at the end of Year 3 an expected single payment at the end of Year 10 0Answer for 8%,16%, 32%, 64% annual rates of interest. $0$20$40$60$80$10012345678910Ye a r o f P a y m e n tPresent Value -Single Payment $100Discount Rate (%/year)%816%32%64% 1Homework: Loans You have $90,000 in student loans with an annual payment of $10,500 and an annual interest of 7% . How long would it take you to pay off the loan? What would be the annual payments should you want to pay off the loan in 10 years? PV (Amount borrrowed)$90,000.00PMT (Annual payment)$10,500.00RATE (Annual rate of interest)7%NPER (years to pay off)13.5 2Answer Why or why not would you want to make the larger payments (pay off loan in 10 years rather than 13.5 years)? PV (Amount borrrowed)$90,000.00RATE (Annual rate of interest)7%NPER (years to pay off)10PMT (Annual Payment)($12,813.98) 3Homework Loans (Cont) To buy the new car you want you would need to borrow $35,000. You can