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04 ModelHW4

# 04 ModelHW4 - A I F N(in years \$2,000.00 7 \$30,000.00...

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A  \$2,000.00  I 7% F  \$30,000.00  N (in years) 10.61 Rounds off to 11 years F = A × 1 + i ( 29 N - 1 i F × i A + 1 = 1 + i ( 29 N ln F × i A + 1 = ln 1 + 1 ( 29 × N N = ln F × i A + 1 ln 1 + 1 ( 29 N = 10.6097

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interest 10% YEARS 0  \$200.00  1  \$150.00  2  \$100.00  3  \$100.00  4  \$150.00  5  \$200.00  0  \$200.00  1  \$136.36  2  \$82.64  3  \$75.13  4  \$102.45  5  \$124.18  PV =  \$720.78  P 1 = \$200 + 150( P / F ,10%,1) + \$100( P / F ,1 + 150( P / F ,10%,4) + 200( P / AF 10%,5) P 1 = \$720.78 \$720.78 = A × 1 + 0.1 ( 29 5 - 1 0.1 × 1 + 0.1 ( 29 5 A = \$720.78 3.7908 A = \$190.14
10%,2) + 100( P / F ,10%,3)

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Formula - calculation   14.87 rounds off to 15% F = P 1 + i ( 29 N F = 2 P 2 P = P 1 + i ( 29 N 2 = 1 + i ( 29 5 2 5 = 1 + i i 15%
j = number of products per year F 1 = P 1 + i ( 29 N F 1 = \$10,000,000 × (1.12) 5 F 1 \$17,623,416 F 2 = A × 1 + i ( 29 N - 1 i F 1 = F 2 \$17,623,416 = \$2000 × j × 1 + .12 ( 29 5 - 1 .12 j = \$17,623, 416 \$2000 × 6.353 j 1387

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Answer (a)  The effective rate per period is 12.5% per week So the Nominal Interest Rate is 12.5 times 52 or 650% pe Part (b) calc 45602 percent ( 29 ( 29 456 1 01 . 457 ) 1 ( ) 1 ( %
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04 ModelHW4 - A I F N(in years \$2,000.00 7 \$30,000.00...

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