PLEASE SEE THE ATTACHMENT BELOW.
WEEK FOUR ASSIGNMENT
, you will submit your written answers to questions and calculated answers to problems on an Excel
spreadsheet using formulas for your calculations. I will be downloading the spreadsheet
to review the formulas in the cells of your answers. Please complete the following problems from your
textbook:
Chapter 5
Problem 5-3
Problem 5-5
Problem 5-7
Problem 5-10
Problem 5-23
Questions
5-3 if a firm’s earnings per share grew from $1 to $2 over a 10-year period, the
total growth would be 100%, but the annual growth rate would be less than 10%.
True or false? Explain. (Hint: If you aren’t sure, plug in some numbers and check it
out.)
5-5 To find the present value of an uneven series of cash flows, you must find the
PVs of the individual cash flows and then sum them. Annuity procedures can
never be of use, even when some of the cash flows constitute an annuity, because
the entire series is not an annuity. True or false? Explain
5-7 Banks and other lenders are required to disclose a rate called the APR. What is
this rate? Why did Congress require that it be disclosed? Is it the same as the
effective annual rate? If you were comparing the costs of loans from different
lenders, could you use their APRs to determine the loan with the lowest effective
interest rate? Explain.
5-10 PRESENT AND FUTURE VALUES FOR DIFFERENT INTEREST RATES Find
the following values. Compounding/discounting occurs annually.
a. An initial $200 compounded for 10 years at 4% b. An initial $200 compounded
for 10 years at 8% c. The present value of $200 due in 10 years at 4% d. The
present value of $1,870 due in 10 years at 8% and at 4% e. Define present
value and illustrate it using a time line with data from part d. How are
present values affected by interest rates?
5-23 FUTURE VALUE FOR VARIOUS COMPOUNDING PERIODS Find the amount
to which $500 will grow under each of these conditions:
a. 12% compounded annually for 5 years b. 12% compounded semiannually for 5
years
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