Quiz: Module 3: Chapter 5

Q #1

(Future value) Sales of a new finance book were 17,000 copies this year and were expected to increase by 16 percent per year. What are expected sales during each of the next 3 years? Graph this sales trend and explain. a. If the 17,000 copies of book sales this year were expected to increase by 16 percent per year, what are the expected sales of the new finance book next year? copies (Round to the nearest unit.) b. If the 17,000 copies of book sales this year were expected to increase by 16 percent per year, what are the expected sales of the new finance book in two years? copies (Round to the nearest unit.) c. If the 17,000 copies of book sales this year were expected to increase by 16 percent per year, what are the expected sales of the new finance book in three years? copies (Round to the nearest unit.) d. The following graph shows the sales trend for the next three years. 28000- 26000- 24000- Book Sales 22000- 20000- 18000- 16000- 0 Years Judge whether the following statement about the shape of the sales trend line is true or false. "The sales trend graph is not linear, because this is a compound growth trend." (Select from the drop-down menu.)(Loan amortization) On December 31, Beth Klemkosky bought a yacht for $50,000, paying $14,000 down and agreeing to pay the balance in 14 equal end-of-year installments at 12 percent interest on the declining balance. How big will the annual payments be? These equal payments will be $ . (Round to the nearest cent.)(Complex present value) How much do you have to deposn today so that beginning 12 years from now you can Withdraw $13,000 a year for the next 6 years (periods 12 through 17) plus an additional amount of $26000 in that last year (period 1?)? Assume an interest rate of 15 percent. a. What is the value of the $13000 withdrawals in years 12 through 17 at the end of year 11 if the annual Interest rate is 15 percent? 9 (Round to the nearest cent ) b. What is the present value today ofthe Gryear $13,000 annuity at the end of year 11 (found in part a) ifthe annual interest rate is 15 percent? :5 (Round to the nearest cent.) c. What is the present value of the amount 0f$26'000 withdrawal in year 17 if the annual discount rate is 15 percent? 5 (Round to the nearest cent.) d. How much do you have to deposn today so that beginning 12 years from now you can withdraw $11000 a year for the next6 years (periods 12 through 1?) plus an additional amount of $26,000 in that last year (period 17)? 9 (Round to the nearest cent )