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RWJ HW C5

# RWJ HW C5 - t – 1 r =(\$280,000 \$50,000 1/18 – 1 = 10.04...

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0bda65bac67e250d4915960eb9c4b708706dc0eb.doc 2. To find the FV of a lump sum, we use: FV = PV(1 + r ) t FV = \$2,250(1.10) 16 = \$ 10,338.69 FV = \$8,752(1.08) 13 = \$ 23,802.15 FV = \$76,355(1.17) 4 = \$143,080.66 FV = \$183,796(1.07) 12 = \$413,943.81 6. To answer this question, we can use either the FV or the PV formula. Both will give the same answer since they are the inverse of each other. We will use the FV formula, that is: FV = PV(1 + r ) t Solving for r , we get: r = (FV / PV) 1 /
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Unformatted text preview: t – 1 r = (\$280,000 / \$50,000) 1/18 – 1 = 10.04% 10. To find the PV of a lump sum, we use: PV = FV / (1 + r) t PV = \$700,000,000 / (1.085) 20 = \$136,931,471.85 14. To find the PV of a lump sum, we use: PV = FV / (1 + r) t PV = \$485,000 / (1.2590) 67 = \$0.10 18. To find the FV of a lump sum, we use: FV = PV(1 + r ) t FV = \$2,000 (1.12) 45 = \$327,975.21 FV = \$2,000 (1.12) 35 = \$105,599.24 Better start early! Lee Bertrand Page 1 5/12/2009...
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