3500 3000 2500 2000 1500 1000 500 0 ARITHMETIC II $0.00 1 $1,500 2 Solve for the Annual Worth. • N = Years i = 6.6% $1,815 $2,315 3 Series1 Series2 4 $2,815 $3,315

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Question 7: For the cash flows below, find the value of x that makes the equivalent annual worth in years 1 through 7 equal to $300 per year. Use an interest rate of 10% per year. Year 0 1 2 3 Answer: $619.88 Cash Flow,$ 200 200 200 200 Year 4 5 6 7 Cash Flow, $ X 200 200 200

QUESTION 1a−5√.a2√3a√3√a−5.a23a3 =(with a > 0)1a2√31a231a21a21a.a√1a.aa2a2 QUESTION 2We transferred $1,200 to our bank savings account 5 years ago.Due to the accrued interest the current amount on our savingsaccount has become $1,500. What is the average interest rateper year?5.00%4.00%4.56%5.20%QUESTION 3A researcher examines the relationship between certain independent variables (Xi) being the price, thekind of retailer, advertising efforts and the profit (Y) on a product and applies an ordinary linearregression. The calculated adjusted R2 = 0.046. This means that: 1) The relationship is significant since 0.046 < 5% given that 5% is the tolerable risk2) 4.6% of the profit can be explained by the independent variables3) The relationship appears to be very weak (< 5%) and that no further conclusions are possible4) The real R2 is much higher than 0.046

IV. EXERCISES Directions: Complete the table by finding the unknown values. P im Interest Compounded t j 2000 (1) Semi anually (2) (3) (4) 5000 (6) (7) (8) 5 yrs and 3 mos (9) Quarterly m 2 n Ic (5) 500 F 2800 (10) Page 12

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40 7 520,000 25 98,700 13 LO 1 8. Calculating Annuity Values For each of the following annuities, calculate the future value. Annual Payment Years Interest Rate $2,100 10 8% 6,500 40 1,100 9. 6 5,000 30 10

0 1 2 3 $600 $1200 $1800 At an annual interest rate of 8.5%, the future value of the cash flows in this timeline in year 2 is closest to? Please do not use excel and explain the answer in detail.