Complete the following problem sets from Chapter 5 in Microsoft® Excel®:

- 5-1
- 5-3
- 5-5
- 5-7
- 5-12
- 5-15
- 5-39 (Calculate monthly payment only)

**5-1** **FutureValue** Compute the future value in year 9 of a $2,000 deposit in year 1 and another $1,500 deposit at the end of year 3 using a 10 percent interest rate. *(LG5-1)*

**5-2** **FutureValue** Compute the future value in year 7 of a $2,000 deposit in year 1 and another $2,500 deposit at the end of year 4 using an 8 percent interest rate. *(LG5-1)*

**5-3** **Future Value of an Annuity** What is the future value of a $900 annuity payment over five years if interest rates are 8 percent? *(LG5-2)*

**5-4** **Future Value of an Annuity** What is the future value of a $700 annuity payment over six years if interest rates are 10 percent? *(LG5-2)*

**5-5** **Present Value** Compute the present value of a $2,000 deposit in year 1 and another $1,500 deposit at the end of year 3 if interest rates are 10 percent. *(LG5-3)*

**5-6** **Present Value** Compute the present value of a $2,000 deposit in year 1 and another $2,500 deposit at the end of year 4 using an 8 percent interest rate. *(LG5-3)*

**5-7** **Present Value of an Annuity** What’s the present value of a $900 annuity payment over five years if interest rates are 8 percent? *(LG5-4)*

**5-8** **Present Value of an Annuity** What’s the present value of a $700 annuity payment over six years if interest rates are 10 percent? *(LG5-4)*

**5-9** **Present Value of a Perpetuity** What’s the present value, when interest rates are 7.5 percent, of a $50 payment made every year forever? *(LG5-5)*

**5-10** **Present Value of a Perpetuity** What’s the present value, when interest rates are 8.5 percent, of a $75 payment made every year forever? *(LG5-5)*

**5-11** **Present Value of an Annuity Due** If the present value of an ordinary, 7-year annuity is $6,500 and interest rates are 7.5 percent, what’s the present value of the same annuity due? *(LG5-6)*

**5-12** **Present Value of an Annuity Due** If the present value of an ordinary, 6-year annuity is $8,500 and interest rates are 9.5 percent, what’s the present value of the same annuity due? *(LG5-6)*

Page 124**5-13** **Future Value of an Annuity Due** If the future value of an ordinary, 7-year annuity is $6,500 and interest rates are 7.5 percent, what is the future value of the same annuity due? *(LG5-6)*

**5-14** **FutureValue of an Annuity Due** If the future value of an ordinary, 6-year annuity is $8,500 and interest rates are 9.5 percent, what’s the future value of the same annuity due? *(LG5-6)*

**5-15** **Effective Annual Rate** A loan is offered with monthly payments and a 10 percent APR. What’s the loan’s effective annual rate (EAR)? *(LG5-7)*

**5-16** **Effective Annual Rate** A loan is offered with monthly payments and a 13 percent APR. What’s the loan’s effective annual rate (EAR)? *(LG5-7)*

**5-17** **Future Value** Given a 4 percent interest rate, compute the year 6 future value of deposits made in years 1, 2, 3, and 4 of $1,100, $1,200, $1,200, and $1,500. *(LG5-1)*

INTERMEDIATE PROBLEMS

**5-18** **Future Value** Given a 5 percent interest rate, compute the year 6 future value of deposits made in years 1, 2, 3, and 4 of $1,000, $1,300, $1,300, and $1,400. *(LG5-1)*

**5-19** **Future Value of Multiple Annuities** Assume that you contribute $200 per month to a retirement plan for 20 years. Then you are able to increase the contribution to $300 per month for another 30 years. Given a 7 percent interest rate, what is the value of your retirement plan after the 50 years? *(LG5-2)*

**5-20** **Future Value of Multiple Annuities** Assume that you contribute $150 per month to a retirement plan for 15 years. Then you are able to increase the contribution to $350 per month for the next 25 years. Given an 8 percent interest rate, what is the value of your retirement plan after the 40 years? *(LG5-2)*

**5-21** **Present Value** Given a 6 percent interest rate, compute the present value of payments made in years 1, 2, 3, and 4 of $1,000, $1,200, $1,200, and $1,500. *(LG5-3)*

**5-22** **Present Value** Given a 7 percent interest rate, compute the present value of payments made in years 1, 2, 3, and 4 of $1,000, $1,300, $1,300, and $1,400. *(LG5-3)*

**5-23** **Present Value of Multiple Annuities** A small business owner visits her bank to ask for a loan. The owner states that she can repay a loan at $1,000 per month for the next three years and then $2,000 per month for two years after that. If the bank is charging customers 7.5 percent APR, how much would it be willing to lend the business owner? *(LG5-4)*

**5-24** **Present Value of Multiple Annuities** A small business owner visits his bank to ask for a loan. The owner states that he can repay a loan at $1,500 per month for the next three years and then $500 per month for two years after that. If the bank is charging customers 8.5 percent APR, how much would it be willing to lend the business owner? *(LG5-4)*

**5-25** **Present Value** You are looking to buy a car. You can afford $450 in monthly payments for four years. In addition to the loan, you can make a $1,000 down payment. If interest rates are 5 percent APR, what price of car can you afford? *(LG5-4)*

**5-26** **Present Value** You are looking to buy a car. You can afford $650 in monthly payments for five years. In addition to the loan, you can make a $750 down payment. If interest rates are 8 percent APR, what price of car can you afford? *(LG5-4)*

**5-27** **Present Value of a Perpetuity** A perpetuity pays $100 per year and interest rates are 7.5 percent. How much would its value change if interest rates increased to 9 percent? Did the value increase or decrease? *(LG5-5)*

**5-28** **Present Value of a Perpetuity** A perpetuity pays $50 per year and interest rates are 9 percent. How much would its value change if interest rates decreased to 7.5 percent? Did the value increase or decrease? *(LG5-5)*

**5-29** **Future and Present Value of an Annuity Due** If you start making $50 monthly contributions today and continue them for five years, what’s their future value if the compounding rate is 10 percent APR? What is the present value of this annuity? *(LG5-6)*

**5-30** **Future and Present Value of an Annuity Due** If you start making $75 monthly contributions today and continue them for four years, what is their future value if the compounding rate is 12 percent APR? What is the present value of this annuity? *(LG5-6)*

Page 125**5-31** **Compound Frequency** Payday loans are very short-term loans that charge very high interest rates. You can borrow $225 today and repay $300 in two weeks. What is the compounded *annual* rate implied by this 33.33 percent rate charged for only two weeks? *(LG5-7)*

**5-32** **Compound Frequency** Payday loans are very short-term loans that charge very high interest rates. You can borrow $500 today and repay $590 in two weeks. What is the compounded *annual* rate implied by this 18 percent rate charged for only two weeks? *(LG5-7)*

**5-33** **Annuity Interest Rate** What’s the interest rate of a 6-year, annual $5,000 annuity with present value of $20,000? *(LG5-8)*

**5-34** **Annuity Interest Rate** What’s the interest rate of a 7-year, annual $4,000 annuity with present value of $20,000? *(LG5-8)*

**5-35** **Annuity Interest Rate** What annual interest rate would you need to earn if you wanted a $1,000 per month contribution to grow to $75,000 in six years? *(LG5-8)*

**5-36** **Annuity Interest Rate** What annual interest rate would you need to earn if you wanted a $600 per month contribution to grow to $45,000 in six years? *(LG5-8)*

**5-37** **Add-On Interest Payments** To borrow $500, you are offered an add-on interest loan at 8 percent. Two loan payments are to be made, one at six months and the other at the end of the year. Compute the two equal payments. *(LG5-8)*

**5-38** **Add-On Interest Payments** To borrow $800, you are offered an add-on interest loan at 7 percent. Three loan payments are to be made, one at four months, another at eight months, and the last one at the end of the year. Compute the three equal payments. *(LG5-8)*

**5-39** **Loan Payments** You wish to buy a $25,000 car. The dealer offers you a 4-year loan with a 9 percent APR. What are the monthly payments? How would the payment differ if you paid interest only? What would the consequences of such a decision be? *(LG5-9)*

**5-40** **Loan Payments** You wish to buy a $10,000 dining room set. The furniture store offers you a 3-year loan with an 11 percent APR. What are the monthly payments? How would the payment differ if you paid interest only? What would the consequences of such a decision be? *(LG5-9)*

**5-41** **Number of Annuity Payments** Joey realizes that he has charged too much on his credit card and has racked up $5,000 in debt. If he can pay $150 each month and the card charges 17 percent APR (compounded monthly), how long will it take him to pay off the debt? *(LG5-10)*

**5-42** **Number of Annuity Payments** Phoebe realizes that she has charged too much on her credit card and has racked up $6,000 in debt. If she can pay $200 each month and the card charges 18 percent APR (compounded monthly), how long will it take her to pay off the debt? *(LG5-10)*

**5-43** **Future Value** Given an 8 percent interest rate, compute the year 7 future value if deposits of $1,000 and $2,000 are made in years 1 and 3, respectively, and a withdrawal of $700 is made in year 4. *(LG5-10)*

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https://phoenix.vitalsource.com/books/1259827178/epubcfi/6/24[;vnd.vst.idref=body012]!/4/4/2/2@0:38.0

**Due on:**16 Jun, 2016 12:00:00

**Asked on:**14 Jun, 2016 02:09:57

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