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FIN 370 Week 3 Problems 4–6 through 5–6 PaperScholar Study Aids
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FIN 370 Week 3 Problems 4–6 through 5–6

FIN 370 Week 3 Problems 4–6 through 5–6


4-6. A cash budget is usually thought of as a means of planning for future financing needs. Why would a cash budget also be important for a firm that had excess cash on hand?

5-1A. (Compound interest) To what amount will the following investments accumulate?

$5,000 invested for 10 years at 10 percent compounded annually
$8,000 invested for 7 years at 8 percent compounded annually
$775 invested for 12 years at 12 percent compounded annually
$21,000 invested for 5 years at 5 percent compounded annually

5-4A. (Present value) What is the present value of the following future amounts?

$800 to be received 10 years from now discounted back to the present at 10 percent
$300 to be received 5 years from now discounted back to the present at 5 percent
$1,000 to be received 8 years from now discounted back to the present at 3 percent
$1,000 to be received 8 years from now discounted back to the present at 20 percent

5-5A. (Compound annuity) What is the accumulated sum of each of the following streams of payments?

$500 a year for 10 years compounded annually at 5 percent
$100 a year for 5 years compounded annually at 10 percent
$35 a year for 7 years compounded annually at 7 percent
$25 a year for 3 years compounded annually at 2 percent
5-6A. (Present value of an annuity) What is the present value of the following annuities?

$2,500 a year for 10 years discounted back to the present at 7 percent
$70 a year for 3 years discounted back to the present at 3 percent
$280 a year for 7 years discounted back to the present at 6 percent
$500 a year for 10 years discounted back to the present at 10 percent