FIN 419 ASSIST Perfect Education/fin419assist.cofi FIN 419 ASSIST Perfect Education/fin419assist.cofi | Page 25

4. Income statement. From the following income statement accounts,
a. produce the income statement for the year
Chapter 5: Problem 3
3. EAR. What is the EAR of a mortgage that is advertised at 7.75%
(APR) over the next twenty years and paid with monthly payments?
Chapter 5: Problem 5
5. Present value with periodic rates. Let’s follow up with Sam Hinds,
the dentist, and his remodeling project (Chapter 4, Problem 12). The
cost of the equipment for the project is $18,000, and he will finance
the purchase with a 7.5% loan over six years. Originally, the loan
called for annual payments. Redo the payments based on quarterly
payments (four per year) and monthly payments (twelve per year).
Compare the annual cash outflows of the two payments. Why does
the monthly payment plan have less total cash outflow each year?
Original Problem from Chapter 4, Problem 12 to go with Chapter 5
Problem 5:
12. Payments. Sam Hinds, a local dentist, is going to remodel the
dental reception area and add two new workstations. He has
contacted A-Dec, and the new equipment and cabinetry will cost