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Round percentages and ratios to the nearest tenth of a percent, dollars to nearest whole dollar. 1. a. ________dollars b. ________dollars c. ________% d. ________dollars Use the attached present and future value tables to answer the following questions: a) Tom needs to have $20,000 in his investment account in 7 years. If his account earns 6% interest per year, how much must he deposit today in order to have $20,000 7 years from now? b) If, instead, Tom deposits $2,000 each year in the account for the next 7 years, how much will he have in the account at the end of 7 years? c) Tom wants to buy a vehicle for the business. The sticker price is $28,000. The dealer is offering him an annual payment plan of $5,873.72 per year for 6 years if he wants to finance the vehicle. What annual interest rate is the dealer charging?

Round percentages and ratios to the nearest tenth of a percent, dollars to nearest whole dollar. 1. a. ________dollars b. ________dollars c. ________% d. ________dollars Use the attached present and future value tables to answer the following questions: a) Tom needs to have $20,000 in his investment account in 7 years. If his account earns 6% interest per year, how much must he deposit today in order to have $20,000 7 years from now? b) If, instead, Tom deposits $2,000 each year in the account for the next 7 years, how much will he have in the account at the end of 7 years? c) Tom wants to buy a vehicle for the business. The sticker price is $28,000. The dealer is offering him an annual payment plan of $5,873.72 per year for 6 years if he wants to finance the vehicle. What annual interest rate is the dealer charging?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Round percentages and ratios to the nearest tenth of a percent, dollars to nearest whole dollar. 1. a. ________dollars b. ________dollars c. ________% d. ________dollars Use the attached present and future value tables to answer the following questions: a) Tom needs to have $20,000 in his investment account in 7 years. If his account earns 6% interest per year, how much must he deposit today in order to have $20,000 7 years from now? b) If, instead, Tom deposits $2,000 each year in the account for the next 7 years, how much will he have in the account at the end of 7 years? c) Tom wants to buy a vehicle for the business. The sticker price is $28,000. The dealer is offering him an annual payment plan of $5,873.72 per year for 6 years if he wants to finance the vehicle. What annual interest rate is the dealer charging? d) Tom pays $2,400 per year for rent on the first of January each year. He wants to deposit an amount in his 6% investment today that will allow him to draw $2,400 each year for the next 5 years. How much will he need to deposit today in order to draw $2,400 per year for 5 years?
■ Present Value of a Periodic Payment (Annuity) 2% 3% 4% 1.0300 1.0400 1.0000 1.0200 2.0100 2.0200 2.0300 2.0400 3.0301 3.0604 3.0909 3.1216 4.0604 4.1216 4.1836 4.2465 5.1010 5.2040 5.3091 5.4163 6.1520 6.3081 6.4684 6.6330 7.6625 7.8983 7.2135 7.4343 8.2857 8.5830 8.8923 9.2142 9.3685 9.7546 10.159 10.583 10 10.462 10,950 11.464 12.006 11 11.567 12.169 12.808 13.486 12 12.683 13.412 14.192 15.026 13 13,809 14.680 15.618 16,627 14 14.947 15.974 17.086 15 16.097 17.293 18.599 16 20.157 17.258 18.639 18.430 20.012 21.762 17 18 19.615 21.412 23.414 19 20.811 22.841 25.117 20 22.019 24.297 26.870 24 26.973 30.422 34,426 36 43.077 51.994 63.276 Period 1% 1 2 3 4 5 6 7 8 9 6% 7% 8% 9% 5% 1.0500 1.0600 10% 1.1000 1.0700 1.0800 1.0900 2.0500 2,0600 2.0700 2.0800 2.0900 2.1000 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 4.4399 4.5061 4,5731 4.6410 5.7507 6.9753 7.1533 4.3101 4.3746 5.5256 5.6371 6.8019 8.1420 8.3938 5.8666 5.9847 6.1051 7.3359 7.5233 7.7156 8.6540 8.9228 9.2004 9.4872 9,5491 9.8975 10.260 10.637 11.028 11.436 11.027 11.491 11.978 12.488 13.021 13.579 12.578 13.181 14.487 15.193 15.937 13.816 15.784 14:207 14.972 16.645 17.560 18.531 15.917 16.870 17.888 18.977 20.141 21.384 17.713 18.882 21.495 22.953 24.523 21.015 20.141 22.550 25,129 24.215 26.019 27.975 23.276 27.152 29,361 31.772 25.673 27.888 30.324 33.003 35.950 28.213 30.840 33.750 36.974 40.545 33.999 37.450 41.301 45.599 37.379 41.446 46.018 30.906 33.760 36.786 40.995 45.762 51.160 50,816 58.177 66.765 76.790 119.121 148.913 187.102 236.125 Future Value of an Annuity 18.292 19.599 20.024 21.579 21.825 23.657 23.698 25.840 25.645 28.132 27.671 30.539 29.778 33.066 39.083 44.502 77.598 95.836 51.159 57.275 88.497 299.127
Transcribed Image Text:■ Present Value of a Periodic Payment (Annuity) 2% 3% 4% 1.0300 1.0400 1.0000 1.0200 2.0100 2.0200 2.0300 2.0400 3.0301 3.0604 3.0909 3.1216 4.0604 4.1216 4.1836 4.2465 5.1010 5.2040 5.3091 5.4163 6.1520 6.3081 6.4684 6.6330 7.6625 7.8983 7.2135 7.4343 8.2857 8.5830 8.8923 9.2142 9.3685 9.7546 10.159 10.583 10 10.462 10,950 11.464 12.006 11 11.567 12.169 12.808 13.486 12 12.683 13.412 14.192 15.026 13 13,809 14.680 15.618 16,627 14 14.947 15.974 17.086 15 16.097 17.293 18.599 16 20.157 17.258 18.639 18.430 20.012 21.762 17 18 19.615 21.412 23.414 19 20.811 22.841 25.117 20 22.019 24.297 26.870 24 26.973 30.422 34,426 36 43.077 51.994 63.276 Period 1% 1 2 3 4 5 6 7 8 9 6% 7% 8% 9% 5% 1.0500 1.0600 10% 1.1000 1.0700 1.0800 1.0900 2.0500 2,0600 2.0700 2.0800 2.0900 2.1000 3.1525 3.1836 3.2149 3.2464 3.2781 3.3100 4.4399 4.5061 4,5731 4.6410 5.7507 6.9753 7.1533 4.3101 4.3746 5.5256 5.6371 6.8019 8.1420 8.3938 5.8666 5.9847 6.1051 7.3359 7.5233 7.7156 8.6540 8.9228 9.2004 9.4872 9,5491 9.8975 10.260 10.637 11.028 11.436 11.027 11.491 11.978 12.488 13.021 13.579 12.578 13.181 14.487 15.193 15.937 13.816 15.784 14:207 14.972 16.645 17.560 18.531 15.917 16.870 17.888 18.977 20.141 21.384 17.713 18.882 21.495 22.953 24.523 21.015 20.141 22.550 25,129 24.215 26.019 27.975 23.276 27.152 29,361 31.772 25.673 27.888 30.324 33.003 35.950 28.213 30.840 33.750 36.974 40.545 33.999 37.450 41.301 45.599 37.379 41.446 46.018 30.906 33.760 36.786 40.995 45.762 51.160 50,816 58.177 66.765 76.790 119.121 148.913 187.102 236.125 Future Value of an Annuity 18.292 19.599 20.024 21.579 21.825 23.657 23.698 25.840 25.645 28.132 27.671 30.539 29.778 33.066 39.083 44.502 77.598 95.836 51.159 57.275 88.497 299.127
Periods 1 2 13 4 5 16 7 8 9 10 11 Present Value of a Lump Sum Payment (Compound Interest) 12 13 14 15 16 17 18 19 20 1 12 3 4 5 0 Periods (n) 6 7 8 19 10 11 12 13 14 15 16 17 18 PRESENT VALUE TABLE 19 20 Interest rates (r) 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 0.990 0.980 0.971 0.962 0.952 0.9430.935 0.926 0.917 0.909 0.980 0.961 0.943 0.925 0.907 0.890 0.873 0.857 0.842 0.826 0.971 0.942 0.915 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.961 0.924 0.888 0.855 0.8230.792 0.763 0.735 0.708 0.683 0.951 0.906 0.863 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.942 0.888 0.837 0.790 0.746 0705 0.666 0.630 0.596 0.564 0.933 0.871 0.8130.760 0.711 0.665 0.623 0.5830.547 0.513 0.923 0.853 0.789 0.731 0.677 0.627 0.5820.540 0.502 0.467 0.914 0.837 0.766 0.703 0.6450.592 0.544 0.500 0.460 0.424 0.905 0.820 0.744 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.896 0.804 0.722 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.887 0.788 0.701 0.625 0.557 0.497 0.444 0.397 0.356 0.319 0.879 0.773 0.681 0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.870 0.758 0.661 0.577 0.505 0.442 0.3880.340 0.299 0.263 0.861 0.743 0.642 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.853 0.728 0.623 0.534 0.458 0.394 0.339 0.292 0.252 0.218 0.844 0.714 0.605 0.513 0.436 0.371 0.317 0.270 0.231 0.198 0.836 0.700 0.587 0.494 0.4160.350 0.296 0.250 0.212 0.180 0.828 0.686 0.570 0.475 0.396 0.331 0.277 0.232 0.194 0.164 0.820 0.673 0.554 0.456 0.377 0.3120.258 0.215 0.178 0.149 Interest rates (r) 1.783 1.759 1.736 2.577 2.531 2.487 3.312 3.240 3.170 3.993 3.890 3.791 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 1.970 1.942 1.913 1.886 1.859 1.833 1.808 2.941 2.884 2.829 2.775 2.723 2.673 2.624 3.902 3.808 3.717 3.630 3.546 3.465 3.387 4.853 4.713 4.580 4.452 4.329 4.212 4.100 5.795 5.601 5.417 5.242 5.076 4.917 4.767 4.6234.4864.355 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.7475.535 5.335 8.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.9955.759 9.471 8.983 8.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 10.368 9.787 9.253 8.760 8.306 7.887 7.499 11.255 10.575 9.954 9.385 8.863 8.384 7.943 12.134 11.348 10.635 9.986 9.394 8.853 8.358 13.004 12.106 11.296 10.563 9.899 9.295 8.745 13.865 12.849 11.938 11.118 10.380 9.712 9.108 14.718 13.578 12.561 11.652 10.838 10.106 9.447 15.562 14.292 13.166 12.166 11.274 10.4779.763 9.122 8.544 8.022 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.3728.756 8.201 17.226 15.679 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 18.046 16.351 14.878 13.590 12.462 11.470 10.594 9.818 9.129 8.514 8.851 8.313 7.824 Present Value of a Periodic Payment (Annuity) 7.139 6.805 6.495 7.536 7.1616.814 7.904 7.487 7.103 8.244 7.786 7.367 8.559 8.061 7.606
Transcribed Image Text:Periods 1 2 13 4 5 16 7 8 9 10 11 Present Value of a Lump Sum Payment (Compound Interest) 12 13 14 15 16 17 18 19 20 1 12 3 4 5 0 Periods (n) 6 7 8 19 10 11 12 13 14 15 16 17 18 PRESENT VALUE TABLE 19 20 Interest rates (r) 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 0.990 0.980 0.971 0.962 0.952 0.9430.935 0.926 0.917 0.909 0.980 0.961 0.943 0.925 0.907 0.890 0.873 0.857 0.842 0.826 0.971 0.942 0.915 0.889 0.864 0.840 0.816 0.794 0.772 0.751 0.961 0.924 0.888 0.855 0.8230.792 0.763 0.735 0.708 0.683 0.951 0.906 0.863 0.822 0.784 0.747 0.713 0.681 0.650 0.621 0.942 0.888 0.837 0.790 0.746 0705 0.666 0.630 0.596 0.564 0.933 0.871 0.8130.760 0.711 0.665 0.623 0.5830.547 0.513 0.923 0.853 0.789 0.731 0.677 0.627 0.5820.540 0.502 0.467 0.914 0.837 0.766 0.703 0.6450.592 0.544 0.500 0.460 0.424 0.905 0.820 0.744 0.676 0.614 0.558 0.508 0.463 0.422 0.386 0.896 0.804 0.722 0.650 0.585 0.527 0.475 0.429 0.388 0.350 0.887 0.788 0.701 0.625 0.557 0.497 0.444 0.397 0.356 0.319 0.879 0.773 0.681 0.601 0.530 0.469 0.415 0.368 0.326 0.290 0.870 0.758 0.661 0.577 0.505 0.442 0.3880.340 0.299 0.263 0.861 0.743 0.642 0.555 0.481 0.417 0.362 0.315 0.275 0.239 0.853 0.728 0.623 0.534 0.458 0.394 0.339 0.292 0.252 0.218 0.844 0.714 0.605 0.513 0.436 0.371 0.317 0.270 0.231 0.198 0.836 0.700 0.587 0.494 0.4160.350 0.296 0.250 0.212 0.180 0.828 0.686 0.570 0.475 0.396 0.331 0.277 0.232 0.194 0.164 0.820 0.673 0.554 0.456 0.377 0.3120.258 0.215 0.178 0.149 Interest rates (r) 1.783 1.759 1.736 2.577 2.531 2.487 3.312 3.240 3.170 3.993 3.890 3.791 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 0.990 0.980 0.971 0.962 0.952 0.943 0.935 0.926 0.917 0.909 1.970 1.942 1.913 1.886 1.859 1.833 1.808 2.941 2.884 2.829 2.775 2.723 2.673 2.624 3.902 3.808 3.717 3.630 3.546 3.465 3.387 4.853 4.713 4.580 4.452 4.329 4.212 4.100 5.795 5.601 5.417 5.242 5.076 4.917 4.767 4.6234.4864.355 6.728 6.472 6.230 6.002 5.786 5.582 5.389 5.206 5.033 4.868 7.652 7.325 7.020 6.733 6.463 6.210 5.971 5.7475.535 5.335 8.566 8.162 7.786 7.435 7.108 6.802 6.515 6.247 5.9955.759 9.471 8.983 8.530 8.111 7.722 7.360 7.024 6.710 6.418 6.145 10.368 9.787 9.253 8.760 8.306 7.887 7.499 11.255 10.575 9.954 9.385 8.863 8.384 7.943 12.134 11.348 10.635 9.986 9.394 8.853 8.358 13.004 12.106 11.296 10.563 9.899 9.295 8.745 13.865 12.849 11.938 11.118 10.380 9.712 9.108 14.718 13.578 12.561 11.652 10.838 10.106 9.447 15.562 14.292 13.166 12.166 11.274 10.4779.763 9.122 8.544 8.022 16.398 14.992 13.754 12.659 11.690 10.828 10.059 9.3728.756 8.201 17.226 15.679 14.324 13.134 12.085 11.158 10.336 9.604 8.950 8.365 18.046 16.351 14.878 13.590 12.462 11.470 10.594 9.818 9.129 8.514 8.851 8.313 7.824 Present Value of a Periodic Payment (Annuity) 7.139 6.805 6.495 7.536 7.1616.814 7.904 7.487 7.103 8.244 7.786 7.367 8.559 8.061 7.606
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