summary and practice questions
Business Finance
1)What is the FV of a stream of $500 payment at the end of each year for 10 years
compounded annually at 5%?
Cal N= i/y= pv= pmt= - fv= 6,288.
The PV of Ordinary Annuity What is the present value of an annuity of $10,000 to be
received at the end of each year for 10 years given a 10 percent discount rate?
N= 10
i/y=
pv=61,445.
pmt=10, fv=
2)What is the PV of a stream of $500 payment a year for 10 years compounded annually at
5%? N= i/y= pv= 3,860. pmt= - fv=
Solving for PMT If you can earn 12 percent on your investments, and you would like to
accumulate $100,000 for your newborn child’s education at the end of 18 years, how much
must you invest annually to reach your goal? N= i/y= 12 pv=
pmt=-1,793.
fv=100,
3)You would like to save up $25,000 in 15 years. If you put aside some annual payments at
7%/year. Calculate your annual amount that you have to save each year.
N= 15
i/y= 7 pv=
pmt= -994.
fv= 25,
Solving for the Interest Rate in an Ordinary Annuity Put (-) on pmt In 20 years, you are
hoping to have saved $100,000 towards your child’s college education. If you are able to
save $2,500 at the end of each year for the next 20 years, what rate of return must you earn
on your investments in order to achieve your goal? N= i/y= 6. pv= pmt=-2, fv=$100,
4. In 10 years, you are hoping to have saved $50,000. If you are able to save $3,500 at
the end of each year for the next 10 years, what rate of return must you earn on your
investments in order to achieve your goal?
Business Finance
1)What is the FV of a stream of $500 payment at the end of each year for 10 years
compounded annually at 5%?
Cal N= i/y= pv= pmt= - fv= 6,288.
The PV of Ordinary Annuity What is the present value of an annuity of $10,000 to be
received at the end of each year for 10 years given a 10 percent discount rate?
N= 10
i/y=
pv=61,445.
pmt=10, fv=
2)What is the PV of a stream of $500 payment a year for 10 years compounded annually at
5%? N= i/y= pv= 3,860. pmt= - fv=
Solving for PMT If you can earn 12 percent on your investments, and you would like to
accumulate $100,000 for your newborn child’s education at the end of 18 years, how much
must you invest annually to reach your goal? N= i/y= 12 pv=
pmt=-1,793.
fv=100,
3)You would like to save up $25,000 in 15 years. If you put aside some annual payments at
7%/year. Calculate your annual amount that you have to save each year.
N= 15
i/y= 7 pv=
pmt= -994.
fv= 25,
Solving for the Interest Rate in an Ordinary Annuity Put (-) on pmt In 20 years, you are
hoping to have saved $100,000 towards your child’s college education. If you are able to
save $2,500 at the end of each year for the next 20 years, what rate of return must you earn
on your investments in order to achieve your goal? N= i/y= 6. pv= pmt=-2, fv=$100,
4. In 10 years, you are hoping to have saved $50,000. If you are able to save $3,500 at
the end of each year for the next 10 years, what rate of return must you earn on your
investments in order to achieve your goal?
