Errors_in_Lecture_Notes_F10

Errors_in_Lecture_Notes_F10 - = 1 . 0001923 365 365 Page 35...

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ERRORS IN LECTURE NOTES - FALL 2010 In spite of my best efforts, you may find the occasional error in the lecture notes. If you do, please just email me and I will revise this file and let the whole class know. CHAPTER 5 - TIME VALUE OF MONEY page 13 Ignore the last sentence on the page (the one in brackets). page 16 = 1000 x PVIFA = 1000 x [1- 1/(1 . 06 )] / . 06 t=5,k=6% 5 8 This / was missing. page 18 line should read: The Rule of 72 states that 72 divided by the interest rate (in whole numbers) page 23 error in formula on bottom third of the page. FV of the Annuity Due: = $200 x {[1.08) -1] / .08 }x 1.08 10 page 27 line in bottom third of page should read: Therefore the EFFECTIVE ANNUAL RATE (EAR) 8 page 28 exponents at the end of these two lines should have read as shown below: QR% Frequency m EAR(%) Calculation: 10 Weekly 52 10 . 51 (1 + . 10 / 52) = 1 . 0002739 52 52 10 Daily 365 10 . 515 (1+ . 10 / 365)
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Unformatted text preview: = 1 . 0001923 365 365 Page 35 In your lecture notes it appears that you have two pages numbered 35. Ignore the FIRST page 35 - it was included by mistake . It is from an earlier edition of my coursepack. The solutions to the problems on page 34 are on page 36. Page 35 ( The second page 35) - solution to #8 should read: Its an annuity due. Total number of deposits from age 30 to 55 inclusive are: 26. Bank is charging: (1+ . 06 / 12) -1 = 1 . 005 -1 = 6 . 17%. FVIFA = (1 . 0617 -1)/.0617 = 60 . 663 12 12 26 You will have saved $5000 x 60.663 x 1 . 0617 =$322,032.01 Page 35 (The second page 35) -solution to #9 should read: Bank is charging: 1 . 01375-1 = 5 . 61%. You are pay 1 . 01375-1= . 004562 per month. 4 4/12 PV = $400 x [1 - (1/1.004562 )] /. 004562 = $400 x 33 . 1297 = $13,252 36...
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