Ch3Solutions

Ch3Solutions - Chapter 3 3.1 Effective 3.2 Simple: F = P +...

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Chapter 3  3.1 Effective 3.2 Simple: F = P + Pni = 20 + 20(1)(0.18) = $23.6 million Compound: F = 20(1 + 0.18) 1 = $23.6 million Difference = 23.6 – 23.6 = $0 3.3 (a) Quarter (b) Semiannual (c) Month (d) Week (e) Continuous 3.4 (a) 2 (b) 6 (c) 1 3.5 (a) 12 (b) 3 (c) 24 3.6 (a) r = 4% (b) r = 0.04*2 = 8% (c) r = 0.04*4 = 16% 3.7 (a) Nominal (b) Effective (c) Effective (d) Nominal (e) Nominal 3.8 i/yr = (1 + 0.12/4) 4 –1 = 12.55% 3.9 i/yr = (1 + 0.16/4) 4 –1 = 16.99% 3.10 0.12 = (1 + r/4) 4 -1 1.12 = (1 + r/4) 4 (1 + r/4) = 1.12 0.25 1 + r/4 = 1.0287 r = 11.48% 3.11 i/yr = e 0.12 – 1 = 12.75% 3.12 r/quarter = 0.06 i/quarter = e 0.06 – 1 = 6.18% 3-1
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3.13 0.036/quarter = e r –1 e r = 1.036 Take natural log of both sides: r = 0.035367 = 3.54% per quarter r/month = 0.0354/3 = 1.18% 3.14 (a) Years (b) Semiannual (c) Quarter 3.15 Time periods on i and n must be years 3.16 Time periods on i and n must be semiannual 3.17 P = 190,000(P/F,2%,36) = 190,000(0.4902) = $93,138 3.18 F = 250,000(F/P,1%,24) = 250,000(1.2697) = $317,425 3.19 F = 160,000(F/P,4%,14) = 160,000(1.7317) = $270,072 3.20 F = 192,000(F/P,1.5%,60) =192,000(2.4432) = $469,094 3.21 F = 2.3(F/P,5%,20) (millions) = 2.3(2.6533) = $6,102,590 3.22 P = 50,000(P/F,3%,32) = 50,000(0.3883) = $19,415 3.23 P = 80,000(P/F,3%,8) + 90,000(P/F,3%,16) = 80,000(0.7894) + 90,000(0.6232) = $119,240 3.24 i/yr = e 0.14 –1 = 15.03% P = 14(P/F,15.03%,2) (millions) = 14[1/(1 + 0.1503) 2 ] = $10,580,490 3-2
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3.25 i/yr = e 0.10 –1 = 10.52%
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This note was uploaded on 03/24/2011 for the course ISEN 302 taught by Professor Ko during the Spring '08 term at Texas A&M.

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Ch3Solutions - Chapter 3 3.1 Effective 3.2 Simple: F = P +...

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