Answered: 8. Calculate the effective annual…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter19: Lease And Intermediate-term Financing

Section: Chapter Questions

Problem 20P

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Q - 8,9,10

The following are the annual operations. The interest rate for the first fourteen years is 1% per month and thereafter will be 1.5% per month: $100,000 will be contributed at the end of each year for 8 years. end of each year for 8 years (the first is at the end of year 1); equal annual withdrawals will be made from the end of year 10 to the end of year 14 of $60,000; finally, equal contributions of $50,000 will be made from the end of year 15 to the end of year 20.

8. Calculate the effective annual interest rates: Answer 12.6825% and 19.56182%.
9. Calculate the balance in present value: Answer $444,117.28
10. Calculate the balance in future value: Answer $6,903,087.93

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