<p>I am currently taking a business finance class and was having a bit of trouble with some of the equations.
I also am a finance major and was wondering if anybody is in the finance
field career or considering majoring in it.
I dont want somebody to do my homework just help me get a grip on some of it prior to the exam.</p>
<p>Anybody?
Thanks</p>
<p>I'm going to major in finance....:D</p>
<p>Nice.
Have you taken any classes on it and been throught the basics like annuities, amortizations and compound interest?</p>
<p>I'm currently a HS senior and the only thing I know that you've mentioned is compound interest. As opposed to fixed interest, compound interest generates interest on the total of the balance. For example if you have a 5% monthly compound interest on an account with $100 initially, you balance at the end of each month would be:</p>
<p>January: 5% of $100 + The initial $100 = $105
February: 5% of $105(5.25) + The $105 balance = 110.25
March: 5% of $110.25(5.51) + The 110.25 balance = $115.76</p>
<p>Fixed Interested:</p>
<p>January: 5% of $100 + The initial $100 = $105
February: 5% of $100 + The $105 balance = $110
March: 5% of $100 + The $110 balance = $115</p>
<p>Apparently, compound interested should be preferred(if you're not mentally challenged:)) seeing as it would eventually generate a heftier profit over a long period of time.</p>
<p>Here is some of the problems i have am having trouble with :(.
1)Nicholas invested $1100 per year in an IRA each year for 8 years earning 14% compounded yearly.
At the end of 8 years he ceased the IRA payments, but continued to invest his accumulated amount at 15% compounded monthly for the next 4 years.
a) What was the value of his IRA at the end of 8 years?
b)What was the value of the investment at the end of the next 4 years?</p>
<p>2) in 7 years Mike and Janet would like to have $12000 for a down payment on a house. Their budget only allows them to save $678.84 per half-year. What nominal annual interest rate, compounded semi-annually, must their saving account pay?
Answer = %.</p>
<p>7)In 12 years Ralph and Alice would like to have $16000 for a down payment on a house. How much should they deposit each year into an account paying 10% compounded yearly?
5) A diamond mine is expected to yield an annual income of $120000 for the next 18 years, after which it will be sold for $3000. An investor wants an annual return on his investment of 10%. If he can establish a sinking fund earning an annual interest rate of 5%, how much should he pay for the mine? </p>
<p>any help or even setup would help a ton!
Thanks</p>
<p>or</p>
<p>A = P(1 + r)^n
A = future value
P = initial investment
1 = # of times compounded/year
R = rate of interest
n = years compounded </p>
<p>thats the basic equation, i know there's an equation for additions but i forget what it is. you basically use the geometric sum.</p>
<p>Future Value for an Increasing Annuity: It is an increasing annuity is an investment that is earning interest, and into which regular payments of a fixed amount are made. Suppose one makes a payment of R at the end of each compounding period into an investment with a present value of PV, paying interest at an annual rate of r compounded m times per year, then the future value after t years will be </p>
<p>FV = [ PV(1 + i)n + R(1 + i)n - 1 ] / i
where i = r/m is the interest paid each period and n = m </p>
<p>some of that helped but i cant get #1 right.</p>
<p>ANybody got a second to explain #1 and set it up and help me figure it out plz</p>
<p>the answer to A would be 16.5k something something. I dont have a calc on me so i rounded. Then stick that damn number into the above compound interest formula and you have 16,5XX(1+.15)^4</p>
<p>haha i need the answer verbatim because this hw is online and must be perfect.</p>
<p>"haha i need the answer verbatim because this hw is online and must be perfect."</p>
<p>Is this against the Code of Conduct?</p>
<p>Continuously compounding interest formula:</p>
<p>A=Pe^rt</p>
<p>P: Principal (initial amount)
e: 2.7something...that constant
r: Interest rate
t: Time that it's compounding</p>
<p>Compound interest formula:</p>
<p>A=P(1+r/100)^ft</p>
<p>P: Principal (initial amount)
r: Rate in percent (enter it as a whole number i.e. 5 for 5%)
f: Compounding frequency PER YEAR (i.e. if it compounds quarterly then f=4)
t: Time, in years</p>
<p>Another good source for finance:</p>
<p>Go to each professor's site and sometimes you can score powerpoints from their actual class...and speaking of quality, the Stern School of Business was ranked #2 in finance this year, only second to Wharton, above schools like CMU, MIT, Michigan, UVa, Berkeley, and Georgetown, so they're top notch.</p>
<p>Problem 1, part a: $16,593.88
Problem 1, part b: $13,597,037.09</p>