Problem $18$ Points

You are cosidering your retirement plans. You would like to buy a NICE boat and do some fishing. This boat, trailer, and accessories will cost you $$101,000$

You have $$12,000$ to open the account and you will deposit $$365$ at the end of each month.

If you wish to retire in $14$ years, what yearly rate will you need in the market for this to work? YEARLY RATE

Problem $24$ Points

You are considering loaning a friend some money to do business improvments. $($Hey$!$ It's your money!$)$

Since you are friends, you have decided he should pay this all back in ONE, lump sum at the end of $4$ years.

The loan amount will be $$61,000$ and the interest rate is $5\mathrm{.}3\%$ per year.

a$.$ If you charge simple interest, how much will your friend owe at the end? How much interest will he pay?

b$.$ If you charge compound interest, how much will your friend owe at the end. How much interest will he pay?

Problem $310$ Points

How and WHEN you pay back the loan is as important as how much you borrow. You are borrowing $$141,000$ for $6$ years at $4\mathrm{.}15\%$ PY$.$

I am looking for two different methods using COMPOUND interest. ONE OF THE SOLUTION MUST BE A TABLE $($see Chapter $2$ section $4$ of text$)$

Show two DIFFERENT ways and calculate the results that demonstrate financial equivalence for this problem.

Do not show me simple and compound interest. DO NOT simply change the compounding term $($IE$.$ A daily, mothly, yearly calculation$)$

Do not show me two calcualtions that give the same solution. $($IE Excel formula and hand calcualtion$)$

How much will you pay over the life of the loan in each way? WHICH ONE costs you the LEAST amount of interest, WHY?

Briefly explain the concept of financial equivalence. $(2$ PIECES HERE$)1.$ Tell me the book $($OUR TEXTBOOK$)$ definition. $2.$ Tell me what that means in your own words.

I need to see BOTH definitions.

Problem $48$ points

Now that you have the boat, you're going to need something to tow it with. The truck you want is a MODEST $$81,250.$

You are able to place $$2,800$ in to an account at the end of each year. No balance on year $0.$ First deposit is on year $1.$

But, you know that won't get you there. You are retiring in $14$ years.

You are expecing some bonds to mature soon $(6$ Years$).$ Start the savings account now.. $6$ years from now, you will have $$ from bonds to apply to this loan.

If you can get a $3\mathrm{.}75\%$ rate on you account $($PYCY$)...$ how much do you need from your bonds to make this work?

Problem $58$ Points

Please examine the provided cash flow table

Year Cash Flow

$0-11$R

$1-1\mathrm{.}5$R

$265000$

$34\mathrm{.}2$R

$43\mathrm{.}5$R

$5-1\mathrm{.}9$R

$6-23000$

$74\mathrm{.}1$R

$861023$

$91\mathrm{.}6$R

$10-2500$

$11$ R

Use the goal seek function. Answer these questions.

$5$a$.$ What is the value of R at $5\mathrm{.}6\%$ interest to make all of the cash flow transactions balance out?

$5$b$.$ HOW do we know when all of the cash flows, in and out have been balanced?

$5$c$.$ If R is $$27,000$ what is the NEW interest rate we will need?

Problem $612$ points

You are trying to help your boss decide if you should start a new product line over the next $12$ years.

The equipment to make this new product will have an initial cost of $$421,000$ to the company.

At the end of the project, you believe you can get $$51,000$ for the equipment as salvage.

Supplies will cost $$3900$ the first year and go up by $$900$ each year.

Maintenance costs start at $$2050$ the first year and will increase by $1\mathrm{.}6\%$ each year

The company expects to make $$47,$