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
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2-44 (10 - 15 min.) 1. Criteria i and ii in the footnote relate to the earning of the
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Lec_2_Sol - Lecture 2 Solutions E9-41(10 min 1 a b a b FV =...

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