Ch2Solutions

# Ch2Solutions - Chapter 2 Problem Solutions 2-11 a 2000 |-6...

This preview shows pages 1–3. Sign up to view the full content.

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%

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
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
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 5

Ch2Solutions - Chapter 2 Problem Solutions 2-11 a 2000 |-6...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online