Unformatted text preview: answer since they are the inverse of each other. We will use the FV formula, that is: FV = PV(1 + r ) t Solving for r , we get: r = (FV / PV) 1 / t – 1 FV = $297 = $240(1 + r ) 2 ; r = ($297 / $240) 1/2 – 1 = 11.24% FV = $1,080 = $360(1 + r ) 10 ; r = ($1,080 / $360) 1/10 – 1 = 11.61% FV = $185,382 = $39,000(1 + r ) 15 ; r = ($185,382 / $39,000) 1/15 – 1 = 10.95% FV = $531,618 = $38,261(1 + r ) 30 ; r = ($531,618 / $38,261) 1/30 – 1 = 9.17% 5. 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 Solving for t , we get: t = ln(FV / PV) / ln(1 + r ) FV = $1,284 = $560(1.09) t ; t = ln($1,284/ $560) / ln 1.09 = 9.63 years FV = $4,341 = $810(1.10) t ; t = ln($4,341/ $810) / ln 1.10 = 17.61 years...
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 Spring '08
 spurlin
 Time Value Of Money, Future Value, Interest, Valuation

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