Where there are concepts not covered in the text or the undergraduate lecture, I have explained them to you in ‘What You Need to Know' for Week Three. I have also made notes for each question, and they are listed below. 1. a. and b. templates can be found in the case model. c. and d. require you to use a formula to manually calculate the effective interest rate; you can find the formula in the Week Three Time Value Analysis document. Once this is done, you can use the case model to find the future values. Finally, e. is a bonus question (one point); the only hint I can give you is that you must equate the effective interest rates formulas and solve for the unknown. A. $55,000.00 B. 5% = $52,500.00 15% = $57,500.00 C. 2. a. and b. can be found in the case model. c. and d. require you to use the effective interest rates calculated in question 1 above. Then you can use the case model to find the future values. 3. Templates for both a. and b. are in the model. 4. a. Refer to the model for guidance. b. and c. can be solved using the model. d. and e. will require that you use a financial calculator, given the complexity of the problems. There are several calculators on the internet. (See the Web Sites section of this site.) The key inputs are: interest rate, future value, number of annual payments, and amount of each payment. f. is another bonus opportunity (one point). For this bonus question, you have to make an assumption that, under annual compounding, the bank will pay interest on the mid-year payments, and the rate for those payments is that rate which produces an effective annual rate of 10.0 percent. 5. Same comments as for question 4 above, and again one bonus point is possible for f. Also, I couldn’t find a calculator on the web that would do ‘annuity due’ calculations (d. and e.); so you may have to use a real hand-held financial calculator (try the software HP 12C – see the NOTE above). 6. Templates for both a. and b. are in the model. 7. There is a calculator for this problem in the Web Sites area. There are also lots of loan amortization calculators on the web, including ones that will give you the amortization schedules. 8. Don’t do this one. (Unless you feel compelled. Choosing a corporate discount rate is worthy of an entire chapter by itself, and we will address this later.)