Finances: Weekly Questions
Question 1
Annual payment = (r(P))/ (1-(1+)
r - interest rate
P - principal
N - number of periods
Annual payment = (0,07(5,000,000))/ (1-(1+0,0) = 350,000/1-0,3624 = 350,000/0,6376 = $548,934
Payment for period of 15 years = 548,934 15 = $8,234,010
Question 2
Organization current ratio is the attitude of current assets to current liabilities. Current assets include cash, plant and equipment. Current liabilities include accounts payable and long term debt. Organization current ratio = ($600,000 + $1,200,000)/($ 300,000 + $ 300,000) = 1,800,000/600,000 = 3
Question 3
($500,000/ 100) 7 = $35,000 in a year
$35,000/12 month = $2916,66 in a month
Question 4
$20,000 25 = $500,000 in 25 years
($500,000/100) 9% = $45,000 in interest
$45,000/25 = $1,800 in interest in a year
$20,000 + $1,800 = $21,800
Question 5
PV of 20 years investment = $50,000 (1+0,08= $50,000 0,2145 = $10,725
The present value of a future payment of $50,000 is worth $10,725 today if interest rates are 8% per year.
Question 6
Part A
PV with Continuous Compounding = $45,000/ = $31,395.43
Part B
P = A ((1 + i) n - 3 ) / ( i (1 + i) n )
P = $45,000((1,12)/(0,12(1,12) = $45,000 (17-3)/ (0,12 17) = 630,000/3,4 = $185,294
Question 7
(($1,500/ 100) 16%) 10 = $2,400 in 10 years
(($3,000/ 100) 16%) 10 = $4,800 in 10 years
First investment ROI = (2,400 - 1,500)/1,500 = 0,6
Second investment ROI = (4,800-3,000)/3,000 = 0,6
The efficiency of investments is …
