Financial Calculations: Present Value, Future Value, and Rate of Return
Chapter 5 Homework Problems
Problem 1: Present Value Calculation
Calculate the present value of $8,769 to be received in three years at a discount rate of 11.65%.
Problem 2: Future Value Calculation
Determine the future value of a $2,220 investment after 15 years with an annual interest rate of 4.8%, compounded annually.
Problem 3: Rate of Return Calculation
Find the annual rate of return for a project with an initial investment of $16,200 and a sale price of $23,800 after two years.
Problem 4: Future
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Descriptive and Inferential Statistics
Descriptive Statistics
Descriptive statistics involve organizing, summarizing, and presenting data in a meaningful way. This includes measures such as:
- Sample mean (x̄)
- Frequency distributions
- Relative frequency
- Cumulative relative frequency
- Box plots
Inferential Statistics
Inferential statistics involve making conclusions and inferences about a population based on a sample of data. This includes concepts such as:
- Population and sample
- Parameter and statistic
- Variable
Linear Programming Problems and Solutions
Problem #B-1
Solve these problems using simultaneous equations to determine the optimal values of the decision variables and the objective function.
a. Maximize Z = 4×1 + 3×2
Subject to:
Material: 6×1 + 4×2
Labor: 4×1 + 8×2
x1, x2 >= 0
b.
Maximize Z = 6A + 3B
Subject to:
Material:
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Finance Exam Review
Dividend Valuation and Growth
PT Boats Dividend Valuation
PT Boats pays a $2.40 dividend per share for the next 2 years and a final liquidating dividend of $10 per share at the end of year 3. If the required rate of return is 16%, the current value of the stock is $10.26.
Main Street Ant Dividend Valuation
Main Street Ant pays an annual dividend of $2.40, decreasing by 2% annually. With a required rate of return of 15%, the current value of the stock is $14.12.
Factory Stores Dividend
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Chapter 17: Inferences When Standard Deviation is Unknown
Big Idea: T-Test for Unknown Standard Deviation
The t-test is used when the population standard deviation (SD) is unknown. It has fewer conditions than z-tests for inferences about a mean:
- Data is a simple random sample (SRS) from a larger population.
- Observations follow a normal distribution.
- We estimate standard error using s / √n, where s is the sample SD and √n accounts for the variability of sample means.
T-Test Formula and Properties
The
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Problem #B-1: Simultaneous Equations for Optimization
a. Maximize Z = 4×1 + 3×2
Subject to:
Material: 6×1 + 4×2 <= 48 lb (x1 = 2)
Labor: 4×1 + 8×2 <= 80 hr (x2 = 9)
x1, x2 >= 0 (Profit = 35)
b. Maximize Z = 6A + 3B
Subject to:
Material: 20A + 6B <= 600 lb (A = 24)
Machinery: 25A + 20B <= 1000 hr (B = 20)
A, B >= 0 (Profit = 204)
Problem #B-2: Microwave Oven Production
An appliance manufacturer produces two models of microwave ovens: H and W. The goal is to determine the quantities of H and
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