公司财务管理题库1

Problem Set # 11.You want to buy a new car when you graduate, and you expect that the car willcost $25,000. If your money market account earns a 3% APR compounded monthly, how much do you have to save today so that you can buy the car in two years?2.If you deposit $10,000 into a savings account today, how long will it take for thebalance of the account to reach $30,000 if the account pays an APR of 4% with monthly compounding?3.Consider the above problem again: However, this time assume that you deposit$10,000 into the account today and also plan on making monthly deposits (at the end of each month). The APR is still 4% and interest is compounded monthly.How much must your deposit each month in order to build your account balance to $30,000 in four years?4.According to bank lending rules, you can afford at most a monthly mortgagepayment of $1,100.What is the largest 30-year mortgage you can afford if the bank charges an APR of 6.2%?5.Imagine an annuity that pays $75 per year for 20 years. The catch is that the firstpayment occurs exactly 10 years from today. Using a discount rate of 8%, what is the present value (as of today) of this set of cash flows?6.If you can earn 9% on your savings account, which of the following investments isworth the most to you? (1) $10,000 in 8 years; (2) $20,000 in 15years; (3) A 10-year ordinary annuity offering $900 payments; (4) A 25-year annuity due offering $500 payments.7.You walk into a car dealership and pick up a sweet new 2006 Acura TSX. The caris valued at $27,890 today. The salesman tells you that they are running a special interest rate, and that if you put down $9,000, your monthly payments (for five years) will be $347.04. What is the APR associated with the “special interest rate”that is being offered to you? newsman Kent Brockman would like to slide behind the wheel of a new Lexusautomobile, but finds that a new one is a little beyond his means. He hears that Lexus is providing 4.9% APR financing for 66 months for certified pre-owned Lexus automobiles. Kent finds a pre-owned Lexus that he likes for $35,000 and has $5,000 for a down payment. What will Kent’s monthly car payment be if he buys this Lexus and takes advantage of the 66-month, 4.9% APR financing offer?9. A father is planning for his son (currently five years old) to attend college in 13years. The father expects that his son’s tuition will be $35,000 per year for fours years. The father can only save $2,800per year (beginning today) for 13 years in a savings account that earns 10% annually. A financial advisor warns the father that these deposits will not be enough to fully fund his son’s expected tuition expense. Assuming the son will make 4 equal withdrawals from the college fund beginning at age 18, how much in additional college funds will the son need to come up with each year?10.Mayor “Diamond”Joe Quimby is planning on retiring in 15 years and hasbegun the necessary planning. Given his lifestyle of excesses, he estimates that he will need $500,000 per year to maintain his current level of comfort.However, also due to his lifestyle of excesses, he will live for only ten years after the date he retires. Assume that Mayor Quimby will take his retirement income payment at the beginning of the year, and will make 15 deposits(beginning one year from now) into his saving account. If Mayor Quimby can invest money at 12%, how much must he embezzle and deposit each year in order to have the money required to fund his 10 retirement income payments? Case study:Gigantic TVs are coolInstructions: You may work on and submit this assignment in a group composed of up to five students. Your group must work independently of other groups; you may not share or borrow your answers with students outside your group. Please keep your answers to the point and well written. The entire assignment must be typed and you must submit BOTH a printed copy to me, AND an electronic to my mailbox. To receive credit, your name must be on the assignment at the time of submission. You also must answer all parts of the question and show full work to receive credit for a problem.Everybody loves gigantic televisions. The American Dream is a television so big that a construction crew has to remove a wall of your house to deliver it. Let’s say that although you have limited funds (actually you are completely broke), you can no longer resist the urge to buy that 64” plasma. Thankfully, the marketing group at Best Buy has a solution for you! Although the TV is valued at $4999, they will deliver and setup this TV and you don’t have to pay a cent today. All you have to do is promise to make monthly payments at the modest APR of 22.9%.(a)If you “buy” the TV today and agree to make monthly payments (starting one monthfrom today) of $ 1 00, how many years will it take you to pay it off?(b)Best Buy also has a “no interest for 6 months” option (see their webpage underFinancing Options, at the bottom) which allows you to payoff the value of TV withinsix months with no interest charge. The catch is that if you do not payoff the entirebalance before the six months is over, interest is computed as if the deal neverexisted.Let’s say that you “buy” the TV and that the only payment you make during the first six months is $250 exactly three months after the purchase date. After the six-month “no interest” period is over, you begin making regular monthly payments (first regular payment is at the end of month 7). How much must your monthly payments be in order to payoff the TV in exactly five years from the purchase date? Be sure to show me what balance is outstanding at the end of the six-month “no interest” period.(c)Now forget about the “no payments for 6 months” deal and assume that you mustmake payments of either 5% of the outstanding balance or $10 (whichever is greater).If you make only the minimum payments, how long will it take you to payoff the TV?Please show me ONLY the outstanding balance and monthly payment for thefirst and last 12 months! Hint: In this problem, the payments are not level, so it is notan annuity. You will have to use Excel to compute the balance at the end of each period,the payment you make, and the interest that accrues during the following period.。