Q.

1
Step 1: Calculate semi-annually payments

Loan amount 96,000

r 4%
n 6

Calculator approach Formula approach

PV = 96,000 Loan amount / PVAF(r,n)
I/Y = 4% *PVAF(4%,6)
N= 6 **PVAF(r,n) value from the table
CPT PMT = ($18,313.14)
Semi-annually payments = $18,313.14

Step 2:
Ammortization schedule
Period Beginning Balance Payment Interest @ 4% Principal re-payment
B.Blnce * 0.04 Payment - Interest
1 96,000.00 18,313.14 3,840.00 14,473.14
2 81,526.86 18,313.14 3,261.07 15,052.07
3 66,474.79 18,313.14 2,658.99 15,654.15
4 50,820.64 18,313.14 2,032.83 16,280.32
5 34,540.32 18,313.14 1,381.61 16,931.53
6 17,608.79 18,313.14 704.35 17,608.79

Q.4 Using MS Excel Formula Calculator Approach & Exc

Cost of capital = 12% FV1
N=3
Year Cash Flow I/Y=12
0 -2000 PV=-200
1 200 PMT=0
2 600 $280.99
3 800
4 1400 Sum of FV
MIRR
MIRR 13.59% The project should be accepted as the MIRR is positive and more than cost of capital
 Formula approach
18313.27
5.24
ue from the table

Ending balance
B.Blnce - P.repayment
81,526.86
66,474.79
50,820.64
34,540.32
17,608.79
0.00

Calculator Approach & Excel formulas

FV2 FV3 FV4
N=2 N=1 N=0
I/Y=12 I/Y=12 I/Y=12
PV=-600 PV=-800 PV=-1400
PMT=0 PMT=0 PMT=0
$752.64 $896.00 $1,400.00

$3,329.63
N=4; PV=-2000; FV=3329.63; PMT=0; CPT I/Y 13.59%
sitive and more than cost of capital