SOLUTIONS CHAPTER 6

# SOLUTIONS CHAPTER 6 - SOLUTIONS CHAPTER 6 BRIEF EXERCISE...

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SOLUTIONS CHAPTER 6 BRIEF EXERCISE 6-7 12% annual interest i = 12% PV = ? FV = \$300,000 0 1 2 3 4 5 n = 5 PV = \$300,000 (PVF 5, 12% ) PV = \$300,000 (.56743) PV = \$170,229 BRIEF EXERCISE 6-8 With quarterly compounding, there will be 20 quarterly compounding periods, at 1/4 the interest rate: PV = \$300,000 (PVF 20, 3% ) PV = \$300,000 (.55368) PV = \$166,104

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BRIEF EXERCISE 6-14 i = 8% PV – OA = R = ? \$25,000 \$25,000 \$25,000 \$25,000 0 1 2 3 4 5 6 11 12 n = 4 n = 8 PV – OA = \$25,000 (PVF – OA 12–4, 8% ) PV – OA = \$25,000 (PVF – OA 8, 8% )(PVF 4, 8% ) OR PV – OA = \$25,000 (7.53608 – 3.31213) PV – OA = \$25,000 (5.74664)(.73503) PV – OA = \$105,599 PV – OA = \$105,599
BRIEF EXERCISE 6-15 i = 8% PV = ? PV – OA = R = \$2,000,000 ? \$140,000 \$140,000 \$140,000 \$140,000 \$140,000 0 1 2 8 9 10 n = 10 \$2,000,000 (PVF 10, 8% ) = \$2,000,000 (.46319) = \$ 926,380 \$140,000 (PVF – OA 10, 8% ) = \$140,000 (6.71008) 939,411 \$1,865,791 BRIEF EXERCISE 6-16 PV – OA = \$20,000 \$4,727.53 \$4,727.53

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## This note was uploaded on 03/16/2010 for the course BUSACC 1205 taught by Professor Boyas during the Spring '10 term at Pittsburgh.

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SOLUTIONS CHAPTER 6 - SOLUTIONS CHAPTER 6 BRIEF EXERCISE...

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