Managerial Final Exam - Essay Example

Part Multiple Choices C 2. A 3. B 4. D 5. D 6. C 7. B 8. B 9. C 10. D 11. B 12. B 13. D 14. C 15. C16. B17. D18. B19. C20. If you invest $10,000 today at 5% annual interest, you will get $12,762.82 after 5 years. This amount will definitely increase as years of investment also increase such that by the 10th year, you will get $16,288.95. The formulae used to describe these figures is: FV = PV (1 + R)n.However, when the interest is paid quarterly, there are small proceeds that are realized from the investment since the maturity period is decreased by the period for which the interest is paid.

This therefore reduces the amount earned after 5 years to be $10,640.82 while that earned after 10 years will be $11,322.71.If the interest rate is increased from 5% to 7%, and the interest is paid annually, the amount that will be earned after 5 years will be more than the amount that was earned at the rate of 5%. This is because there are more proceeds from the increased interest rate as compared to when the interest rate is reduced. Therefore the amount realized after 5 years will be $14,025.

52 and $19,671.51 after 10 years as explained above.21. For this bond, at 5% interest, the value will be $813.53. this value will keep increasing as the interest rate decreases, this is because, during the calculations, increase in the interest rate tries to minimize the total value that is achieved at the end of the calculation. Therefore, at 4% interest, the value will increase to 4851.927 and $935.731 at 2% interest rate.22. One would definitely go for an investment that pays 30% after 5 years than go for one that costs 0.

5% per month after 5 years. This is because the it is better foe an interest rate to that matures after a long period of time since the cumulated earnings to be paid will be more than if the interest were small and is only paid monthly.