Extra TVofM Problems

# Extra TVofM Problems - Chapter 5 Problem 27 To solve this...

This preview shows pages 1–2. Sign up to view the full content.

Chapter 5, Problem 27 To solve this problem, we must find the PV of each cash flow and add them. To find the PV of a lump sum, we use: PV = FV / (1 + r) t PV = \$1,200 / 1.0840 + \$1,100 / 1.0840 2 + \$800 / 1.0840 3 + \$600 / 1.0840 4 PV = \$3,105.74 Calculator: CLR TVM , 8.4% I/Y 1 N , \$1,200 FV , CPT PV -> –\$1,107.01 STO 0 2 N , \$1,100 FV , CPT PV -> –\$936.13 STO + 0 3 N , \$800 FV , CPT PV -> –\$628.06 STO + 0 4 N , \$600 FV , CPT PV -> –\$434.54 STO + 0 RCL 0 -> –\$3,105.74 Chapter 5, Problem 31 Two different interest rates means the problem has to be split in two sections: 1. Introductory rate CLR TVM \$10,000 PV 2.1% / 12 (monthly compounding) = 0.175% I/Y 6 N CPT FV \$10,105.46 2. Rip-off rate +/- PV (assuming \$10,105.46 was still in the display) 17% / 12 (monthly compounding) = 1.4167% I/Y CPT FV \$10,995.43 After one year you owe \$10,995.43 and since you ʼ ve started out with \$10,000, you ʼ ve added the difference of \$995.43 in interest charges. Chapter 5, Problem 32

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

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

{[ snackBarMessage ]}

### Page1 / 3

Extra TVofM Problems - Chapter 5 Problem 27 To solve this...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online