Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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INSTEATRINDANN~~~~~≈¦¦¦¦¦¦¦++744
1
2
3
5
6
8
9
10
11
12
13
14
15
16
18
19
20
21
17 Year Payment Amount
22
23
24
25
26
27
28
29
30
31
32
33 14
36
34 15
37
35 16
38
39
40
A
41
42
~~~~~~ ON OG FW NOONGAWNIO
43
12
45
18
19
20
22
23
24
B
25
Nominal Rate r(m)
Compounding m
Effective Ann. Rate i
Option A (lump sum) amount
Option B (annual) amount
Number of years
Annuity imm. (1) or due (0)
$1,125,000.00
$1,125,000.00
$1,125,000.00
$1,125,000.00
$1,125,000.00
$1,125,000.00
$1,125,000.00
$1,125,000.00
$1,125,000.00
$1,125,000.00
$1,125,000.00
$1,125,000.00
$1,125,000.00
$1,125,000.00
$1,125,000.00
$1,125,000.00
$1,125,000.00
$1,125,000.00
$1,125,000.00
$1,125,000.00
$1,125,000.00
$1,125,000.00
$1,125,000.00
$1,125,000.00
$1,125,000.00
$0.00
C
PV factor
D
3.000%
2
3.02% i= (1 + i(m)/m)^m-1
$15,000,000.00
$1,125,000.00
25
0
E
1.00000 $1,125,000.00
0.97066 $1,091,994.47
0.94218 $1,059,957.26
0.91454 $1,028,859.97
0.88771 $998,675.01
0.86167 $969,375.64
0.83639 $940,935.85
0.81185 $913,330.44
0.78803 $886,534.92
0.76491 $860,525.53
0.74247 $835,279.22
0.72069 $810,773.59
0.69954 $786,986.91
0.67902 $763,898.09
0.65910 $741,486.66
0.63976 $719,732.73
0.62099 $698,617.03
0.60277 $678,120.83
0.58509 $658,225.95
0.56792 $638,914.75
0.55126 $620,170.11
0.53509 $601,975.41
0.51939 $584,314.50
0.50415 $567,171.73
0.48936 $550,531.91
0.47500
$0.00
LL
Total PV(Payments) $20,131,388.51 Total FV(Payments) $41,138,055.36
PV(Payment) FV factor
FV(Payment)
2.04348 $2,298,913.08
1.98353 $2,231,466.99
1.92533 $2,165,999.65
1.86885 $2,102,453.00
1.81402 $2,040,770.71
1.76080 $1,980,898.07
1.70914 $1,922,781.98
1.65900 $1,866,370.92
1.61032 $1,811,614.86
1.56308 $1,758,465.25
1.51722 $1,706,874.95
1.47271 $1,656,798.23
1.42950 $1,608,190.66
1.38756 $1,561,009.16
1.34686 $1,515,211.88
1.30734 $1,470,758.22
1.26899 $1,427,608.74
1.23176 $1,385,725.20
1.19562 $1,345,070.44
1.16054 $1,305,608.43
1.12649 $1,267,304.16
1.09344 $1,230,123.67
1.06136 $1,194,033.99
1.03023 $1,159,003.13
1.00000 $1,125,000.00
0.97066
$0.00
F
G
PV(t =0)
FV(t =n-1)
Diff: A - B
H
Option A:
$15,000,000.00
$30,652,174.34
-$5,131,388.51
Option B:
J
$20,131,388.51
$41,138,055.36
-$10,485,881.02
K
Grading
a) 2 marks
b) 2 marks
c) 2 marks
d) 4 marks
expand button
Transcribed Image Text:INSTEATRINDANN~~~~~≈¦¦¦¦¦¦¦++744 1 2 3 5 6 8 9 10 11 12 13 14 15 16 18 19 20 21 17 Year Payment Amount 22 23 24 25 26 27 28 29 30 31 32 33 14 36 34 15 37 35 16 38 39 40 A 41 42 ~~~~~~ ON OG FW NOONGAWNIO 43 12 45 18 19 20 22 23 24 B 25 Nominal Rate r(m) Compounding m Effective Ann. Rate i Option A (lump sum) amount Option B (annual) amount Number of years Annuity imm. (1) or due (0) $1,125,000.00 $1,125,000.00 $1,125,000.00 $1,125,000.00 $1,125,000.00 $1,125,000.00 $1,125,000.00 $1,125,000.00 $1,125,000.00 $1,125,000.00 $1,125,000.00 $1,125,000.00 $1,125,000.00 $1,125,000.00 $1,125,000.00 $1,125,000.00 $1,125,000.00 $1,125,000.00 $1,125,000.00 $1,125,000.00 $1,125,000.00 $1,125,000.00 $1,125,000.00 $1,125,000.00 $1,125,000.00 $0.00 C PV factor D 3.000% 2 3.02% i= (1 + i(m)/m)^m-1 $15,000,000.00 $1,125,000.00 25 0 E 1.00000 $1,125,000.00 0.97066 $1,091,994.47 0.94218 $1,059,957.26 0.91454 $1,028,859.97 0.88771 $998,675.01 0.86167 $969,375.64 0.83639 $940,935.85 0.81185 $913,330.44 0.78803 $886,534.92 0.76491 $860,525.53 0.74247 $835,279.22 0.72069 $810,773.59 0.69954 $786,986.91 0.67902 $763,898.09 0.65910 $741,486.66 0.63976 $719,732.73 0.62099 $698,617.03 0.60277 $678,120.83 0.58509 $658,225.95 0.56792 $638,914.75 0.55126 $620,170.11 0.53509 $601,975.41 0.51939 $584,314.50 0.50415 $567,171.73 0.48936 $550,531.91 0.47500 $0.00 LL Total PV(Payments) $20,131,388.51 Total FV(Payments) $41,138,055.36 PV(Payment) FV factor FV(Payment) 2.04348 $2,298,913.08 1.98353 $2,231,466.99 1.92533 $2,165,999.65 1.86885 $2,102,453.00 1.81402 $2,040,770.71 1.76080 $1,980,898.07 1.70914 $1,922,781.98 1.65900 $1,866,370.92 1.61032 $1,811,614.86 1.56308 $1,758,465.25 1.51722 $1,706,874.95 1.47271 $1,656,798.23 1.42950 $1,608,190.66 1.38756 $1,561,009.16 1.34686 $1,515,211.88 1.30734 $1,470,758.22 1.26899 $1,427,608.74 1.23176 $1,385,725.20 1.19562 $1,345,070.44 1.16054 $1,305,608.43 1.12649 $1,267,304.16 1.09344 $1,230,123.67 1.06136 $1,194,033.99 1.03023 $1,159,003.13 1.00000 $1,125,000.00 0.97066 $0.00 F G PV(t =0) FV(t =n-1) Diff: A - B H Option A: $15,000,000.00 $30,652,174.34 -$5,131,388.51 Option B: J $20,131,388.51 $41,138,055.36 -$10,485,881.02 K Grading a) 2 marks b) 2 marks c) 2 marks d) 4 marks
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