Chapter 13 Solutions

Chapter 13 Solutions - 10-1.08 = 2,000 14.48656 = 28,973.12...

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Chapter 13 Solutions 1) 100,000 = CF[((1.06) 18 -1)/.06] therefore 100,000 / 30.90565 = $3,235.65 2) FVA = CF[{(1+r)^t – 1} / r] therefore t = {ln[(FVA/CF)r + 1] / ln(1 + r)} t = {ln[(30,000/1,000)(.06) + 1] / ln(1 + .06)} t = {ln[(30)(.06) + 1] / ln(1.06)} t = {ln(2.80) / ln(1.06)} t = 1.02962 / 0.05827 = 17.6698 years 3) FV = 15,000(1.05) 18 = 15,000 * 2.40662 = $36,099.29 4) Louis FVA = 2,000[((1.08)
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Unformatted text preview: 10-1)/.08] = 2,000 * 14.48656 = 28,973.12 FV = 28,973.12 (1.08) 32 = 28,973.12 * 11.73708 = $340,059.91 Charles FVA = 2,000 [((1.08) 20 )-1/.08] = 2,000 * 45.76196 = 91,523.93 FV = 91,523.93 (1.08) 9 = 91,523.93 * 1.999 = $182,956.76 5) After-tax yield = 6.3(1-.25) = 4.725% while the tax-free municipal bond only offers 4.3% therefore take the corporate bond....
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