Selected Solutions - 7

Selected Solutions - 7 - SOLUTIONS TO SELECTED PROBLEMS...

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SOLUTIONS TO SELECTED PROBLEMS Student: You should work the problem completely before referring to the solution. CHAPTER 7 Solutions included for problems 1, 4, 7, 10, 13, 16, 19, 22, 25, 28, 31, 34, 37, 40, 43, 46, 49, 52, and 55 7.1 A rate of return of –100% means that the entire investment is lost. 7.4 Monthly pmt = 100,000(A/P,0.5%,360) = 100,000(0.00600) = $600 Balloon pmt = 100,000(F/P,0.5%,60) – 600(F/A,0.5%,60) = 100,000(1.3489) – 600(69.7700) = $93,028 7.7 0 = -30,000 + (27,000 – 18,000)(P/A,i%,5) + 4000(P/F,i%,5) Solve by trial and error or Excel i = 17.9 % (Excel) 7.10 0 = -10 – 4(P/A,i%,3) - 3(P/A,i%,3)(P/F,i%,3) + 2(P/F,i%,1) + 3(P/F,i%,2) + 9(P/A,i%,4)(P/F,i%,2) Solve by trial and error or Excel i = 14.6% (Excel) 7.13 (a) 0 = -41,000,000 + 55,000(60)(P/A,i%,30) Solve by trial and error or Excel i = 7.0% per year (Excel) (b) 0 = -41,000,000 + [55,000(60) + 12,000(90)](P/A,i%,30) 0 = -41,000,000 + (4,380,000)(P/A,i%,30) Solve by trial and error or Excel i = 10.1% per year (Excel) 7.16 0 = -110,000 + 4800(P/A,i%,60) (P/A,i%,60) = 22.9167 Use tables or Excel i = 3.93% per month (Excel) 7.19 0 = -950,000 + [450,000(P/A,i%,5) + 50,000(P/G,i%,5)] )(P/F,i%,10) Solve by trial and error or Excel Chapter 7 1
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i = 8.45% per year (Excel) 7.22 In a conventional cash flow series, there is only one sign change in the net cash flow . A nonconventional series has more than one sign change.
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