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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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This note was uploaded on 07/15/2010 for the course FINANCE 318 taught by Professor Spurlin during the Spring '08 term at LA Tech.
 Spring '08
 spurlin
 Time Value Of Money, Interest, Valuation

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