{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Solutions-13

Solutions-13 - Chapter 13Solutions to Problems Problem 1...

This preview shows pages 1–3. Sign up to view the full content.

Chapter 13 Solutions to Problems Problem 1: Solution Answers found using Excel formulas: 1. Amount invested = \$10,000 \$21,589.25 Compounding period = annually Number of years = 10 Annual interest rate = 8% Effective interest rate = 8% # of periods compounded = 10 2. Amount invested = \$5,000 \$8,144.47 Compounding period = semi-annually Number of years = 5 Annual interest rate = 10% Effective interest rate = 5% = 10% / 2 # of periods compounded = 10 = 5 years * 2 3. Amount invested = \$8,000; PV of \$8,000 = \$7,107.90 Compounding period = quarterly Number of years = 4 \$12,825.02 Annual interest rate = 12% Effective interest rate = 3% = 12% / 4 # of periods compounded = 16 = 4 years * 4 Answers found using time value of money tables: 1. Amount invested = \$10,000 =\$10,000 × FVF(.08,10) Compounding period = annually =\$10,000 × 2.1589 Number of years = 10 =\$21,589.00 Annual interest rate = 8% Effective interest rate = 8% # of periods compounded = 10 2. Amount invested = \$5,000 =\$5,000 × FVF(.05,10) Compounding period = semi-annually =\$5,000 × 1.6289 Number of years = 5 =\$8,144.50 Annual interest rate = 10% Effective interest rate = 5% = 10% / 2 # of periods compounded = 10 = 5 years * 2 3. Amount invested = \$8,000 =8,000 × FVF(.03,16) Compounding period = quarterly =8,000 × 1.6047 Number of years = 4 =\$12,837.60 Annual interest rate = 12% Effective interest rate= 3% =12% / 4 # of periods compounded= 16 = 4 years × 4

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

View Full Document
Chapter 13 Solutions to Problems Problem 2: Solution Answers found using Excel formulas: 1. Amount required = \$100,000 Compounding periods = annually Annual interest rate = 10% Effective interest rate = 10% Number of compounding periods = 5 Amount to invest = \$62,092.13 2. Amount required =
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern