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RWJ HW C5

# RWJ HW C5 - Solving for r we get r =(FV PV 1 t – 1 r...

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0bda65bac67e250d4915960eb9c4b708706dc0eb.doc Lee Bertrand Page 1 6/10/2008 2. To find the FV of a lump sum, we use: FV = PV(1 + r ) t FV = \$2,250(1.10) 16 = \$ 10,338.69 FV = \$8,752(1.08) 13 = \$ 23,802.15 FV = \$76,355(1.17) 4 = \$143,080.66 FV = \$183,796(1.07) 12 = \$413,943.81 6. To answer this question, we can use either the FV or the PV formula. Both will give the same answer since they are the inverse of each other. We will use the FV formula, that is: FV = PV(1 + r ) t
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Unformatted text preview: Solving for r , we get: r = (FV / PV) 1 / t – 1 r = (\$280,000 / \$50,000) 1/18 – 1 = 10.04% 10. To find the PV of a lump sum, we use: PV = FV / (1 + r) t PV = \$700,000,000 / (1.085) 20 = \$136,931,471.85 14. To find the PV of a lump sum, we use: PV = FV / (1 + r) t PV = \$485,000 / (1.2590) 67 = \$0.10 18. To find the FV of a lump sum, we use: FV = PV(1 + r ) t FV = \$2,000 (1.12) 45 = \$327,975.21 FV = \$2,000 (1.12) 35 = \$105,599.24 Better start early!...
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