Solutions to Some Practice Problems for Chapter 5
(17,921,2324, 26, 30, 31)
51
0
1
2
3
4
5






PV = 2,000
FV
5
= ?
FV
5
= $2,000(1.06)
5
= $2,000(1.338226) = $2,676.45.
Alternatively, with a financial calculator enter the following: N = 5, I/YR = 6, PV = 2000, and
PMT = 0.
Solve for FV = $2,676.45.
52
0
5
10
15
20





PV = ?
FV
20
= 29,000
PV
5
= $29,000/(1.05)
20
= $29,000/2.6532977 = $10,929.80.
With a financial calculator enter the following:
N = 20, I/YR = 5, PMT = 0, and FV = 29000.
Solve
for PV = $10,929.80.
53
0
19


PV = 350,000
FV
19
= 800,000
With a financial calculator enter the following:
N = 19, PV = 350000, PMT = 0, and FV = 800000.
Solve for I/YR = 4.4470%
≈
4.45%.
54
0
N = ?


PV = 1
FV
N
= 2
$2 = $1(1.04)
N
.
With a financial calculator enter the following:
I/YR = 4.0, PV = 1, PMT = 0, and FV = 2.
Solve
for N = 17.67 years.
55
0
1
2
N – 2
N – 1
N



•
•
•



PV = 33,556.25 5,000
5,000
5,000
5,000
FV = 220,000
Using your financial calculator, enter the following data:
I/YR = 12; PV = 33556.25; PMT =
5000; FV = 220000; N = ?
Solve for N = 11.
It will take 11 years to accumulate $220,000.
6%
5%
I/YR = ?
4.0%
12%