HW Solutions (Chapter 5)

HW Solutions (Chapter 5) - 5-32A. (a)FVn=PMT +-=t1n t...

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Unformatted text preview: 5-32A. (a)FVn=PMT +-=t1n t i)(1$50,000=PMT +-=t115t .07)(1$50,000=PMT (FVIFA7%, 15 yr.)$50,000=PMT(25.129)PMT=$1,989.73. per year(b)PV=FVnPV=$50,000 (PVIF7%, 15 yr.)PV=$50,000(.362)PV=$18,100 deposited today(c)The contribution of the $10,000 deposit toward the $50,000 goal isFVn=PV(1 + i)nFVn=$10,000 (FVIF7%, 10 yr.)FV10=$10,000(1.967)=$19,670Thus only $30,330 need be accumulated by annual deposit.FVn=PMT +-=t1n t i)(1$30,330=PMT (FVIFA7%, 15 yr.)$30,330=PMT [25.129]PMT=$1,206.97 per year5-33A. (a)This problem can be subdivided into (1) the compound value of the $100,000 in the savings account (2) the compound value of the $300,000 in stocks, (3) the additional savings due to depositing $10,000 per year in the savings account for 10 years, and (4) the additional savings due to depositing $10,000 per year in the savings account at the end of years 6-10. (Note the $20,000 deposited in years 6-10 is covered in parts (3) and (4).)(1)Future value of $100,000FV10=$100,000 (1 + .07)10FV10=$100,000 (1.967)FV10=$196,700(2)Future value of $300,000...
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HW Solutions (Chapter 5) - 5-32A. (a)FVn=PMT +-=t1n t...

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