*label*Business Finance

### Question Description

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- Ch. 5: Questions 3 & 4 (Question and Problems section): Microsoft
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- Ch. 7: Questions 3 &11 (Questions and Problems section)
- Ch. 8: Questions 1 & 6 (Questions and Problems section): Microsoft
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## Tutor Answer

please find the attached completed assignment.

FIN 370 WEEK 2

“FIN 370 WEEK 2.”

Name:

Course code:

Institution of affiliation:

Date of submission:

1

FIN 370 WEEK 2

3. Calculating Present Values [LO2] For each of the following, compute the present

value:

SOLUTION.

Present value refers to the current value of the money which is payable at some specified

future time.

It can be calculated by the formula

PV= FV[1/(1+i)n

Where:

PV is the present value

FV is the future value

I is interest rate

N is the number of years.

For:

i.

FV given as $15,451

i= 9%

n= 13yrs

2

FIN 370 WEEK 2

PV

= $15,451x[1/(1+0.09)13

= $15,451 x 1/3.066

= $5,039.47

Hence here the PV = $5,039.47

ii.

For;

FV given as $51,557

i is 7%

n is 4 years

PV

= 51, 557 x [1/ (1+0.07)4]

= 51,557x [1/1.311]

= $39,326.47

Hence PV is calculated as $39,326.47

iii.

For;

FV is given as $886,073

i is 24%

n is 29 years

PV

= 886,073 x [1/ (1+0.24)29]

= 886,073 x [1/511.95}

= $1.73

Hence the PV is calculated as $1.73

iv.

For;

FV is given as $550,164

3

FIN 370 WEEK 2

i is 35%

n is 40 years

= 550,164 x [1/(1+0.35)40]

PV

=550,164 x [1/163,437.13]

=$3.37

Hence PV is given as calculated as $3.37

4. Calculating Interest Rates [LO3] Solve for the unknown interest rate in each of the

following:

SOLUTION.

Interest rate is calculated using the formula:

Interest rate= (future value/present value) 1/years – 1

i.

given;

PV = $181

Years = 4 years

FV = $ 297

4

FIN 370 WEEK 2

Interest rate (i)

= (297/181)1/4 -1

= (1.6409)1/4 – 1

= 1.1318 – 1...

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