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1 PV = -5000 N = 7 I = 7.25% PMT = 0 FV = \$ 8161.15 2 FV = 5,000,000 N = 5 I = 100% PMT = 0 PV = \$ 156,250 Investment (A) : PV = -500 FV = 1000 N = 6 I = 12.2462 % 3 Investment (B) : PV = -250 FV = 0 N = 10 PMT = 45 I = 12.4148 % Step 1: Compute future cost of trip PV = -2250 N = 4 I = 6% PMT = 0 FV = \$ 2840.57 4 Step 2: Find required deposits PV = 0 FV = 2840.57 N = 4 I = 2% PMT = \$ 689.19 5.7% APR, \$2000 down PV = 17854 – 2000 = 15854 FV = 0 N = 5 I = 5.7% PMT = \$ 3733.02 6.0% APR, \$2500 down PV = 17854 – 2500 = 15354 FV = 0 N = 5 I = 6.0% PMT = \$ 3644.98 5 5.5 % APR; how much down? PMT = -3250 FV = 0 N = 5 I = 5.5% PV = 13,878.42 17,854 – 13,878.42 = 3975.58 down Additional Time Value of Money Problems Answers : © 2003 Brian J. Henderson & Joseph M. Marks

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6 This problem has three steps to it. This is not unlike problems that may appear on the midterm, so get used to trying to organize this type of information. Let’s begin with a logical overview of this problem.
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