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Solution 3

# Solution 3 - Solutions for Tutorial 3 5.1 FV10 = PV(1 i n =...

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Solutions for Tutorial 3 5.1 \$53973.12 = ) 08 . 1 ( × 25000 = ) + 1 ( × = 10 10 n i PV FV 5.6 41 . 1153 \$ 4 072 . 0 1 1000 1 2 4 2 mn m i PV FV 5.25 years 3.801 ) 12 . 1 ln( ) 5385 . 1 ln( ) 5385 . 1 ln( ) 12 . 1 ln( 5385 . 1 3 . 1 2 ) 12 . 1 ( ) 12 . 1 ( 3 . 1 2 ) 1 ( n n g PV FV n n n n 5.32 a. Initial investment = PV = \$5000 Interest rate for first 7 years = i 1 = 7.3% Interest rate for next 6 years = i 2 = 5.5% Interest rate for next 3 years = i 3 = 8.2% Investment value at age 16 years = FV 16 \$14300.94 ) 2667 . 1 ( ) 3788 . 1 ( ) 6376 . 1 ( 5000 ) 082 . 1 ( ) 055 . 1 ( 073 . 0 1 5000 ) 1 ( ) 1 ( ) 1 ( 3 6 7 3 3 6 2 7 1 16 i i i PV FV b. Interest rate for from age 17 to 18 = i 4 = 4.6% Interest rate for next 3 years = i 5 = 7.6% Investment at start of 16 th year = PV = \$14 300.94 Investment value at age 21 years = FV 21

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