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TVM Test Power Test 1

This document outlines a test for the Financial Management course at Unity University, focusing on various financial calculations. It includes tasks such as preparing an amortization schedule, calculating present value of cash flows, determining interest rates, and estimating investment growth. The test is a group open book format with a total duration of three hours.

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22 views1 page

TVM Test Power Test 1

This document outlines a test for the Financial Management course at Unity University, focusing on various financial calculations. It includes tasks such as preparing an amortization schedule, calculating present value of cash flows, determining interest rates, and estimating investment growth. The test is a group open book format with a total duration of three hours.

Uploaded by

abrhammengistusecond
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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Unity University

Department of Accounting and Finance


Financial Management (ACFN 341)
Test Two (15%)
By Ins. Fitsum T (MSc)
Instructions:
 Show all the necessary steps clearly.
 It is a group open book test (max three student in one group)
 Write your name, ID, section and other information at the separate cover page.
 Allowed time 3 hr. (7:30 to 10:30 local time).
Work out

1. You just recently borrowed $50,000 from a bank for five (5) years to purchase a new car. The loan has a
fixed annual payment at the end of each year over the next 5 years. The loan has annual interest rate of
12 percent with compounding annually.

Required: A. Prepare an amortization schedule

B. Calculate the remaining principal balance at the end of year three?

C. How much in total did you pay for the $50,000 loan

2. Assume that you will receive $2,500 a year in Years 1 through 3, $3,500 a year in Years 4 through 5, and
$4,500 in Year 6 through year 20 (for fifteen Years), with all cash flows to be received at the end of the
year. If you require a 12 percent rate of return, what is the present value of these cash flows?

3. Assume on January 1, 2013 you deposit $5,000 in a bank, which compute interest semiannually
and the amount on deposit on December 31,2022 is $13,266.48. what is the semiannual interest
rate accruing on the deposit?

4. A family invest $ 150,000 today to provide for the college education of their child. The family
beliefs that $ 285,000 will be necessary for four years of college. If the family can invest at 6%
how many years will I takes to accumulate $285,000? Round to the nearest year.

5.How many quarterly Rent for $ 500 are required to accumulate $ 9320, if the amount on deposit
earns interest at 8% compounded quarterly? Round to the nearest number.

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