Important - Look at all tabs below

1a. You buy a car that costs 34,500. You pay interest of 0.4% compounded monthly. What i
1b. What is your monthly car payment if you have a 48 month term?

Rate
Months (a)
Months (b)
Amount

0.004
60
48
34500

pounded monthly. What is your monthly car payment if you have a 60 month term?
PMT

-$791.39

month term?

PMT

-$647.90

2a. Assume you just graduated and started your job today. You hope to retire in 35 years an

2b. With the same assumptions at 2a, how much will you have in your account at 8% interes

2c. If you start saving at the end of year 1 and save all annual periods until you retire, how m

Years (1)
Years (2)

24
35

Rate (1)
Rate(2)

0.05
0.08

Amount

5000

ou hope to retire in 35 years and plan to put away money ($5,000 annually) in your 401K account, bu

ve in your account at 8% interest?

al periods until you retire, how much will you have in your 401K if you earn 5% interest and save $5,00

2a.

$222,509.99

2b.

$333,823.80

2c.

$861,584.02

ally) in your 401K account, but you don't end up saving any money until 11 years from now. How muc

rn 5% interest and save $5,000 annually

il 11 years from now. How much money will you have at retirement if you account earns 5% annually?

you account earns 5% annually?

3.0 A Family Friend is interested in starting their own restaurant business and heard you cou

The parameters around their business are: Assume interest/borrowing rate of 6% per year. A
Do not consider Tax or Depreciation Impact - Deter
At a 6% interest, how many years does it take to b
Option 1
Leasing
Lease Space
Lease Equipment

Option 2

$14,000
$5,000

Lease/buy
Lease Space
Buy Equipment

Option 3

$14,000
$22,000

Buy Everything
Buy and Rennovate Space
Buy Equpment

Option

NPV @ 5 years

NPV @ 15 years

$84,811.19

$219,550.78

$84,940.37

$186,748.76

$102,000.00

$102,000.00

Option 1 and 3 break even during Year 8

$80,000
$22,000

usiness and heard you could help them make effective economic decisions. They have 3 choices :

wing rate of 6% per year. Assume the business will be analyzed for a 5 year life and a
epreciation Impact - Determine the net present worth of each option at 5 and 15 years
ny years does it take to break even between Option 1 and Option 3?

per year
per year

Payable at end of period + Increases by $500 per year

Payable at end of period, increases 2% per year

per year
Total

Payable at end of period+ Increases by $500 per year

Payable at beginning (Time Zero)

Total
Total

Payable at beginning (Time Zero)

Payable at beginning (Time Zero)

1.02

Option 1 - Year
0
1
2
3

Space
$0.00
$14,000.00
$14,500.00
$15,000.00

Equipment
$0.00
$5,000.00
$5,100.00
$5,202.00

Total
$0.00
$19,000.00
$19,600.00
$20,202.00

4
5
6
7
8
9
10
11
12
13
14
15

$15,500.00
$16,000.00
$16,500.00
$17,000.00
$17,500.00
$18,000.00
$18,500.00
$19,000.00
$19,500.00
$20,000.00
$20,500.00
$21,000.00

$5,306.04
$5,412.16
$5,520.40
$5,630.81
$5,743.43
$5,858.30
$5,975.46
$6,094.97
$6,216.87
$6,341.21
$6,468.03
$6,597.39

$20,806.04
$21,412.16
$22,020.40
$22,630.81
$23,243.43
$23,858.30
$24,475.46
$25,094.97
$25,716.87
$26,341.21
$26,968.03
$27,597.39

They have 3 choices :

ar life and a 15 year life because they just don't know if it will make it.
nd 15 years

0.06

PV
$0.00
$17,924.53
$17,443.93
$16,961.99

Option 2 - Year
0
1
2
3

Space
$0.00
$14,000.00
$14,500.00
$15,000.00

$16,480.33
$16,000.41
$15,523.52
$15,050.78
$14,583.21
$14,121.69
$13,666.97
$13,219.72
$12,780.50
$12,349.79
$11,927.99
$11,515.43

4
5
6
7
8
9
10
11
12
13
14
15

$15,500.00
$16,000.00
$16,500.00
$17,000.00
$17,500.00
$18,000.00
$18,500.00
$19,000.00
$19,500.00
$20,000.00
$20,500.00
$21,000.00

Equipment
$22,000.00
$0.00
$0.00
$0.00

Total
$22,000.00
$14,000.00
$14,500.00
$15,000.00

PV
$22,000.00
$13,207.55
$12,904.95
$12,594.29

$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00

$15,500.00
$16,000.00
$16,500.00
$17,000.00
$17,500.00
$18,000.00
$18,500.00
$19,000.00
$19,500.00
$20,000.00
$20,500.00
$21,000.00

$12,277.45
$11,956.13
$11,631.85
$11,305.97
$10,979.72
$10,654.17
$10,330.30
$10,008.96
$9,690.90
$9,376.78
$9,067.17
$8,762.57

Option 3 - Year
0
1
2
3

Space
$80,000.00
$0.00
$0.00
$0.00

Equipment
$22,000.00
$0.00
$0.00
$0.00

4
5
6
7
8
9
10
11
12
13
14
15

$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00

$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00

Total
$102,000.00
$0.00
$0.00
$0.00

PV
$102,000.00
$0.00
$0.00
$0.00

$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00

$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00
$0.00