Extra TVofM Problems

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

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

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