Financial Management Essay
CHAPTER 2EX.4Year 1Year 2Year3Cash flow$432$137$797We use the following formula: [pic 1]= 375.65[pic 2]= 103.59[pic 3]= 524.04[pic 4]PV=PV1+PV2+PV3=375.65+10359+524.04 => PV=1003.28EX.19PV=100000 => PV=102136.83[pic 5] => PV=95000[pic 6] => PV=107354,24[pic 7]PV= => PV=92857.14 [pic 8][pic 9]Answer: CHOOSE D BECAUSE IT HAS THE HIGHEST PVEX.21A = [ ]*F [pic 10]A= ( )*20000 => A=3275.95[pic 11][pic 12][pic 13][pic 14][pic 15][pic 16][pic 17][pic 18][pic 19][pic 20]EX.28[pic 21]k: compounding intervalst: number of yearsA => r =12% (Annual interest)B => r =11.7%, r/2=5.85% = 0.0585 (Semi-annual interest)
C => r =11.5% (Continuously) AFTER 1 YEAR: => FVA = $1.120[pic 22] => FVB = $1.120[pic 23]=> FVC = $1.122[pic 24]AFTER 5 YEAR: => FVA = $1.762[pic 25] => FVB = $1.766[pic 26]=> FVC= $1.777[pic 27]AFTER 20 YEAR: => FVA = $9.646[pic 28] => FVB = $9.719[pic 29]=> FVC = $9.974[pic 30]Answer: THE BEST INVESTMENT WOULD BE C.CHAPTER 3EX.15 [pic 31] => P = 55.84[pic 32]Coupon rate (C) = 100*5% = 5[pic 33]t: frequency of coupon paymentsn: number of years => [pic 34][pic 35]EX.16Coupon rate =5.5%, r/2= 2.75% (every six months)