Exam 2 Cheat sheet Finance 3770: | Download for quality grades |

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1. Remember that if a problem says pmt at the bgn, 2nd pmt2 nd Enter2 nd quit 2. When it asks for the effective interest rate compounding daily, take APR of 21//2nd 2(plug in APR21... ), scroll down to C/Y(plug in 365), scroll up to EFFCPT=23.143 3. Rule of 72 applies to doubling money, equation is i/y x N=72 4. Compounded continuously: ( e^.055x7)1255 Where 5.5=% and 7= years,1255 was the investment. 5. IF the problem says compounding continuously with no year, then cpt (e^.096)-1=10.07 6. Assume that you are buying a house cost 275,000, the annual interest rate is12.5 over 25 years. Pmt =monthly. Find interest during 13th year. //// FIND PMT 1st I/y=12.5/12, N=300,pv=275,000. PMT=2998.47 2 nd PV Periods are 145-156 arrow to find INT. 7. Assume that a preferred stock pays a $5.55 dividend per year forever, if your Required rate of return is 6.66% how much is the stock worth? ( 5.55/.0666)=83 8. **** IF the problem gives you info for a regular annuity, and asks for annuity due, Take the info PV=7800, i/y=9.5 and solve in this template, 7800 (1+.095) = 8541 9. You deposit 5000 every year for 10 years, earning 8.88 for all the years in the problem. The question asks after making the last deposit how many years will it take to reach FV= [Show More]

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