Chapter 1 Solution Set

Chapter 1 Solution Set - $5,444.67 therefore choose 5 in...

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Chapter 1 Solution Set 1) FV = PV (1+r)^t = $34,000(1+.05)^10 = $55,382.42 FV = PV (1+r)^t = $34,000(1+.05)^20 = $90,212.12 2) a) FV = PV (1+r)^t = $8,000(1+.06)^3 = $9,528.13 b) PV = FV / (1+r)^t = $3,000 / (1+.05) = $2,857.14 c) FVA = CF[{(1+r)^t – 1} / r] = $2,400[{(1+.06)^3 – 1} / 0.06] = $7,640.64 d) PVA = CF[{1 – 1 / (1+r)^t}/r] = $1,000 [{1 – 1 / (1.06)^3}/.06] = $2,673.01 3) a) FV = PV (1+r)^t = $400(1+.05)^2 = $441 b) FVA = CF[{(1+r)^t – 1} / r] = $1,200[{(1+.07)^10 – 1} / 0.07] = $16,579.74 c) PV = FV / (1+r)^t = $2,000 / (1+.05)^3 = $1,727.68 d) PVA = CF[{1 – 1 / (1+r)^t}/r] = $6,000 [{1 – 1 / (1.06)^10}/.06] = $44,160.52 e) PV = FV / (1+r)^t = $8,000 / (1+.08)^5 =
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Unformatted text preview: $5,444.67 therefore choose 5 in years f) PV = FV / (1+r)^t = $3,000 / (1+.07)^4 = $2,288.69 g) FVA = CF[{(1+r)^t 1} / r] = $1,200[{(1+.09)^15 1} / 0.09] = $35,233.10 FVA = CF[{(1+r)^t 1} / r] = $1,200[{(1+.10)^15 1} / 0.10] = $38,126.98 The difference is 2,893.88 4) a) PV = $30,000.00 b) PV = FV / (1+r)^t = $40,000 / (1+.05)^5 = $31,341.05 c) PV = FV / (1+r)^t = $10,000 / (1+.05) + $25,000 / (1.05)^3 = $31,119.75 d) PVA = CF[{1 1 / (1+r)^t}/r] = $4,000 [{1 1 / (1.05)^10}/.05] = $30,886.94 + $4,000 = $34,886.94 5) a) 72/2 = 36 years b) 72/4 = 18 years c) 72/6 = 12 years d) 72/8 = 9 years e ) 72/10 = 7.2 years...
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This note was uploaded on 08/27/2008 for the course FIN 200 taught by Professor Delcorral during the Spring '08 term at Loyola New Orleans.

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