Ch2Solutions

Ch2Solutions - Chapter 2 Problem Solutions 2-11 a. 2000? |...

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Chapter 2 Problem Solutions 2-11 a. 2000 2001 2002 2003 2004 2005 | | | | | | -6 12 (in millions) With a calculator, enter N = 5, PV = -6, PMT = 0, FV = 12, and then solve for I/YR = 14.87%. b. The calculation described in the quotation fails to consider the compounding effect. It can be demonstrated to be incorrect as follows: $6,000,000(1.20) 5 = $6,000,000(2.48832) = $14,929,920, which is greater than $12 million. Thus, the annual growth rate is less than 20%; in fact, it is about 15%, as shown in part a. 2-17 0 1 2 3 4 30 | | | | | | 85,000 -8,273.59 -8,273.59 -8,273.59 -8,273.59 -8,273.59 With a calculator, enter N = 30, PV = 85000, PMT = -8273.59, FV = 0, and then solve for I/YR = 9%. 2-19 a. Begin with a time line: 40 41 64 65 | | | | 5,000 5,000 5,000 Using a financial calculator input the following: N = 25, I/YR = 9, PV = 0, PMT = 5000, and solve for FV = $423,504.48. b. 40 41 69 70 | | | | 5,000 5,000 5,000 FV = ? Using a financial calculator input the following: N = 30, I/YR = 9, PV = 0, PMT = 5000, and solve for FV = $681,537.69. c. 1. 65 66 67 84 85 | | | | | 423,504.48 PMT PMT PMT PMT Using a financial calculator, input the following: N = 20, I/YR = 9, PV = -423504.48, FV = 0, and solve for PMT = $46,393.42. 2. 70 71 72 84 85 | | | | | 681,537.69 PMT PMT PMT PMT ? I/YR = ? 9% 9% 9% 9%
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Using a financial calculator, input the following: N = 15, I/YR = 9, PV = -681537.69, FV = 0, and solve for PMT = $84,550.80. 2-26 Using the information given in the problem, you can solve for the maximum car price  attainable. Financed for 48 months
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Ch2Solutions - Chapter 2 Problem Solutions 2-11 a. 2000? |...

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