BA 320 9 – 12 QUESTIONS WITH 100%
CORRECT ANSWERS { GRADED A+}
Explain the difference between positive and negative cash flow. If you borrow
$20,000 from a bank, is that a positive or negative cash flow? Justify your answer.
- ✔✔Positive cash flow is money flowing to you or your company. Negative cash
flow is money flowing away from you or your company. Borrowing $20,000 from
a bank is a positive cash flow because the money is flowing to you.
What is the formula to calculate how much a savings account would be worth if the
initial balance is $1000 with monthly deposits of $75 for 10 years at 4.3 percent
annual interest compounded monthly? What is the formula result? - ✔✔Enter the
formula =FV(4.3%/12, 10*12, -75, 1000), which returns the value $9,684.13.
You want a savings account to grow from $1,000 to $5,000 within two years.
Assume the bank provides a 3.2 percent annual interest rate compounded monthly.
What is the formula to calculate how much you must deposit each month to meet
your savings goal? What is the formula result? - ✔✔Enter the formula
, =PMT(3.2%/12, 2*12, 1000, 5000), which returns the negative cash flow value
($245.09). Based on the formula result, you will need to deposit about $245 per
month in the savings account to reach the savings goal.
You want to take out a loan for $250,000 at 4.8 percent interest compounded
monthly. If you can afford to make monthly payments of only $1,500 on the loan,
what is the formula to calculate the number of months required to repay the loan
completely? What is the formula result? - ✔✔Enter the formula =NPER(4.8%/12,
-1500, 250000), which returns the value 275.2020128. Based on the formula result,
it will take 276 months (23 years) to pay off the loan.
Rerun your calculations from Question 4 assuming that you can afford only a
$1,000 monthly payment. What are the revised formula and resulting value? How
do you explain the result? - ✔✔Enter the formula =NPER(4.8%/12, -1000,
250000), which returns the value #NUM!, indicating that the monthly payments
are insufficient to pay back the loan.
You take out a 10-year loan for $250,000 at 5.3 percent interest compounded
monthly. What is the formula to calculate the monthly payment and the resulting
value? - ✔✔To calculate the monthly payment, enter the formula =PMT(5.3%/12,
10*12, 250000), which returns the negative cash flow value ($2,688.45).
CORRECT ANSWERS { GRADED A+}
Explain the difference between positive and negative cash flow. If you borrow
$20,000 from a bank, is that a positive or negative cash flow? Justify your answer.
- ✔✔Positive cash flow is money flowing to you or your company. Negative cash
flow is money flowing away from you or your company. Borrowing $20,000 from
a bank is a positive cash flow because the money is flowing to you.
What is the formula to calculate how much a savings account would be worth if the
initial balance is $1000 with monthly deposits of $75 for 10 years at 4.3 percent
annual interest compounded monthly? What is the formula result? - ✔✔Enter the
formula =FV(4.3%/12, 10*12, -75, 1000), which returns the value $9,684.13.
You want a savings account to grow from $1,000 to $5,000 within two years.
Assume the bank provides a 3.2 percent annual interest rate compounded monthly.
What is the formula to calculate how much you must deposit each month to meet
your savings goal? What is the formula result? - ✔✔Enter the formula
, =PMT(3.2%/12, 2*12, 1000, 5000), which returns the negative cash flow value
($245.09). Based on the formula result, you will need to deposit about $245 per
month in the savings account to reach the savings goal.
You want to take out a loan for $250,000 at 4.8 percent interest compounded
monthly. If you can afford to make monthly payments of only $1,500 on the loan,
what is the formula to calculate the number of months required to repay the loan
completely? What is the formula result? - ✔✔Enter the formula =NPER(4.8%/12,
-1500, 250000), which returns the value 275.2020128. Based on the formula result,
it will take 276 months (23 years) to pay off the loan.
Rerun your calculations from Question 4 assuming that you can afford only a
$1,000 monthly payment. What are the revised formula and resulting value? How
do you explain the result? - ✔✔Enter the formula =NPER(4.8%/12, -1000,
250000), which returns the value #NUM!, indicating that the monthly payments
are insufficient to pay back the loan.
You take out a 10-year loan for $250,000 at 5.3 percent interest compounded
monthly. What is the formula to calculate the monthly payment and the resulting
value? - ✔✔To calculate the monthly payment, enter the formula =PMT(5.3%/12,
10*12, 250000), which returns the negative cash flow value ($2,688.45).
