Answers to Study Guide - Time Value of Money Problems

1. $530.00, 561.80, 471.70, 445.00

2. $312.80

3. Rate of return investing in Manhattan = 5.94% versus 6% return at the bank. At 6% per year, Manhattan real estate should be worth $74.115B. So Peter did pay too much for Manhattan, with the information given.

4. a. $1210.00, 1207.50, 1207.50

5. $13,455, 38,337

6. $1000 vs. $911.17

7. 7.18%

8. $26,910

9. 15.14%

10. $101,257, 897,596

11. $268,923

12. Choose Offer A - $7.58m vs. $7.52m

13. premium, premium, discount, discount

14. F, T, T

15. 7.5%

16. $179.86, $877.11, 1170.27, 1000

17. $385,543, $8518, $72.57, $.62

18. Assume ten years to maturity. 8.93%, 10.53, 9%.