Finance ( Exercises )

Problems

Solution

Model A

• Today value is 32,000
• In 4 years  19,2000
• Calculate the PV (15,795.89), where 
• rate = 0.05
• nper = 4
• fv = 19,200
• Add 32,000 plus -15,7953.89 = $16,204.11

Model B

• Today value is 28,000
• In 4 years  12,6000
• Calculate the PV (10,366.05), where 
• rate = 0.05
• nper = 4
• fv = 12,600
• Add 28,000 plus -10,366.05 = $17,633.95

Finally

• Rest the value from Model A ($16,204.11) to Model B ($17,633.95)
• The result is Model A with a difference of $1,4293.84

 Solution

• Calculate the FV for each 12, 13, 14 and 15

Year 12	Year 13	Year 14	Year 15
($21,395.82)	($22,893.53)	($24,496.07)	($26,210.80)

• Calculate the PV for each year

Year 12	Year 13	Year 14	Year 15
$11,913.99	$12,140.93	$12,372.18	$12,607.84

• Add the four years
• The result is $49,034.94

Solution

• Find the monthly percentage =  6% annual rate / 12 = .005 = 5%
• Multiply per the borrowed amount = 200,000 * 5% =1000
• The result is 1000

Solution

• Calculate the time period, n=31
• This is because the birthday 35 is the T=1
• As I get it is that she start collecting the money since 34, where T=0
• Calculate the amount of money using FV
• The right formula is FV because you want to know from birthday 35th to the birthday 65th, you are looking to the future

Solution

• Establish the payment for the first rate
• PMT(0.1/12, (12*15), 180000) = ($1,934.29)

• Calculate PV for the next 5 years with the first rate of 10%
• PV(0.1/12,(5*12),-1934.29) = ($91,038.04)
• Calculate PV for the next 5 years with the new rate of 12%
• PV(0.1/12,60,1900) = ($89,424.20)
• Add the fees = ($90,424.20)
• Calculate the difference of the two rates = ($613.83)
• The result is a gain in the new rate of $613.83

Solution

• Define the amount to pay = 300,000 * 0.80 = 240,000
• Calculate the PMT for the first 10 years
• =PMT(0.09/12,(12*15), 240000) = ($2,434.24)
• Calculate the PV for the last 5 yeats using the PMT 
• =PV(0.09/12,60, ($2,434.24) ) = $117,265.54
• Calculate the PMT for the next 5 years using the new rate of 6%
• PMT(0.06/12,60,B50) = ($2,267.07)
• Subtract the first PMT less the second PMT
• = $2,434.24 - $2,267.07 = $167.17
• Calculate the PV of the difference to know the total amount to pay
• =PV(0.06/12,5*12, $167.17) = $8,646.88
• Add to the amount the fee of 4,000
• The result is 

  $4,646.88

  
  

I still dont know why is a) the correct answer

a) 15000-1500=13500 b) 500+(200*36)+8000=15700 c) 15000 (the price is split into 36 installments so you are paying the full price here)

The correct answer is A), because in the other options you are spliting over 15000 and for that little point you´d be paying more