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newnanta3

# newnanta3 - Chapter3: Solution31 P = \$3,000 F = \$3,405 N =...

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Chapter 3: Interest and Equivalence  Solution 3-1 P = \$3,000. F = \$3,405. N = 1.5 Years. Interest Earned = F - P = \$3,405 - \$ 3,000 = \$405. For simple interest rate, interest earned = P × i × n. 405 = 3,000 × i × 1.5. i= 405 / 4,500 = 0.09 = 9% per year. Solution 3-2 F = P × (1 + r/m) n × m . The correct choice is (f), None of the above. Solution 3-3 P = \$10,000 F = \$20,000 i =12% n =? 20,000 = 10,000 +{10,000 ×(0.12) × n} n = 10,000 /{(10,000) ×(0.12)}= 8.33 years. Solution 3-4 i = 5%. F = 2 × P. 2 × P = P × (1 + i) n . 2 = (1 + i ) n . 2 = 1.05 n . n = ln (2) / ln (1.05) = 14.2 Years. Solution 3-5 F = \$1,850. n = 12/2002 To 12/2009 = 7 Years. i = 6%. P = F (P/F, i, n) = \$1,850 (0.6651) = \$ 1,230.44 Solution 3-6 P = \$1,295. n = 12/1995 To 12/2002 = 7 Years. i = 6%. F = P (F/P, i, n) = 1,295 (F/P, 6%, 7) = 1,295 (1.504) = \$1,947.68.

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Solution 3-7 The correct choice is C, Single Payment Present Worth Factor. Solution 3-8 F = \$500. n, the # of interest periods = 10 (Compounded semiannually) i = 2%. P = F (P/F, i, n) = 500 (P/F, 2%, 10)= 500 (0.8203) = \$410.15. The correct choice is C. Solution 3-9 Accrued simple interest for 5 years = \$10,000 × 0.12 × 5 = \$6,000 F = Principal + Accrued interest = \$10,000 + 6,000 = \$16,000 P = F (1 + i ) n \$10,000 = \$16,000 (1+ i) 5 a = 0.0986 (or) 9.86% compounded annually b = Accrued interest is still the same. \$10,000 = \$16,000 (1 + i ) 20 ( 1 + i ) 20 = 1.6 i = 0.02378 per quarter Nominal interest rate / Year = 0.02378 × 4 = 0.0951 or 9.51% per year. Solution 3-10 F = 2,000 (F/P, 9%, 3) + 500 (F/P, 9%, 1) = 2,000 (1.295) + 500 (1.090) = \$3,135 Solution 3-11 9% Compounded quarterly

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newnanta3 - Chapter3: Solution31 P = \$3,000 F = \$3,405 N =...

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