{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

ICE 303 Chapter 3 Suggested Answers to Selected End of Chapt

# ICE 303 Chapter 3 Suggested Answers to Selected End of...

This preview shows pages 1–3. Sign up to view the full content.

Lecture 7 Answers to Problems 3-2. Present Value: PV = FV n x ( 29 + n r 1 1 or FV n x (PVF r%, n ) PV = \$100 x (1.08) -6 PV = \$100 x (.6302) PV = \$63.02 3-9. Investment A: \$2,750 x (1.06) 15 = \$6,590.54 Investment B: \$900 x 1.09 5 = \$1,384.76 \$1,000 x 1.09 4 = \$1,411.58 \$1,200 x 1.09 3 = \$1,554.03 \$1,500 x 1.09 2 = \$1,782.15 \$1,800 x 1.09 1 = \$1,962.00 \$8,094.52 Investment C: \$1,200 x [(1.10 10 – 1)/0.10] = \$19,124.91 Investment D: \$19,124.91 x 1.10 = \$21,037.40 3-12. a. End of year ( t ) Budget Shortfall x (1 + .08) -t = Present Value 1 \$5,000 x .925926 = \$4,630 2 4,000 x .857339 = 3,429 3 6,000 x .793832 = 4,763 4 10,000 x .735030 = 7,350 5 3,000 x .680583 = 2,042 \$22,214 An initial deposit of \$22,214 would be needed to fund the shortfall for the pattern shown in the table. b. An increase in the earnings rate would reduce the amount calculated in part a . Lecture 8 Answers to Problems 3-21. a. \$2,000 ÷ 0.075 = \$26,666.67 b. \$2,000 ÷ (0.075 – 0.03) = \$44,444.44 c. As the amount of the scholarship will be increasing each year by 3%, more money must be set aside today to fund the increase.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
3-27. a. Compounding Frequency: FV n = PV x (1 + r ) n A. FV 5 = \$2,500 x (1.03) 10 B. FV 3 = \$50,000 x (1.02) 18 FV 5 = \$2,500 x (1.344) FV 3 = \$50,000 x (1.428) FV 5 = \$3,360 FV 3 = \$71,412 C. FV 10 = \$1,000 x (1.05) 10 D. FV 6 = \$20,000 x (1.04) 24 FV 10 = \$1,000 x (1.629) FV 6 = \$20,000 x (2.563) FV 10 = \$1,629 FV 6 = \$51,266 b. Effective Annual Rate: EAR =
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 3

ICE 303 Chapter 3 Suggested Answers to Selected End of...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online