Lec_2_Sol

# Lec_2_Sol - Lecture 2 Solutions E9-41(10 min 1 a b a b FV =...

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Lecture 2 Solutions E9-41 (10 min.) 1. a. FV = \$6,000(1.3605) = \$8,163 b. FV = \$6,000(1.5735) = \$9,441 2. a. PV = \$6,000(.7350) = \$4,410 b. PV = \$6,000(.6355) = \$3,813 3. Halve the rates and double the number of periods. Present values decline: a. PV = \$6,000(.7307)= \$4,384.20 b. PV = \$6,000(.6274)= \$3,764.40 E9-42 (10-20 min.) 1. a. PV = \$20,000(.6830) = \$13,660 b. PV = \$20,000(.4823) = \$ 9,646 2. The annual rates would be halved and the periods doubled. Present values decline: a. PV = \$20,000(.6768) = \$13,536 b. PV = \$20,000(.4665) = \$ 9,330 3. Present values rise because the money is repaid more quickly: a. PV = \$5,000(3.1699) = \$15,849.50 b. PV = \$5,000(2.5887) = \$12,943.50

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E 9-47 (5-10 min.) Use Table 9A-3 to find the present value of the 9 payments of \$20,000 each @ 16%: \$20,000 x 4.6065 = \$92,130 Total present value includes the immediate payment: Total present value = \$25,000 + \$92,130 = \$117,130
2-44 (10 - 15 min.) 1. Criteria i and ii in the footnote relate to the earning of the

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## This note was uploaded on 05/24/2008 for the course ACC 203 taught by Professor Choi during the Spring '08 term at NYU.

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Lec_2_Sol - Lecture 2 Solutions E9-41(10 min 1 a b a b FV =...

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