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Unformatted text preview: BUSINESS FINANCE CHAPTER 4 HOMEWORK SOLUTIONS P44. Case Case A FV 20 = PV × FVIF 5%,20 yrs. B FV 7 = PV × FVIF 8%,7 yrs. FV 20 = $200 × (2.653) FV 7 = $4,500 × (1.714) FV 20 = $530.60 FV 7 = $7,713 Calculator solution: $530.66 Calculator solution: $7,712.21 C FV 10 = PV × FVIF 9%,10 yrs. D FV 12 = PV × FVIF 10%,12 yrs. FV 10 = $10,000 × (2.367) FV 12 = $25,000 × (3.138) FV 10 = $23,670 FV 12 = $78,450 Calculator solution: $23,673.64 Calculator solution: $78,460.71 E FV 5 = PV × FVIF 11%,5 yrs. F FV 9 = PV × FVIF 12%,9 yrs. FV 5 = $37,000 × (1.685) FV 9 = $40,000 × (2.773) FV 5 = $62,345 FV 9 = $110,920 Calculator solution: $62,347.15 Calculator solution: $110,923.15 P412. a. PV = FV 6 × (PVIF 12%,6 ) b. PV = FV 6 × (PVIF 12%,6 ) PV = $6,000 × (.507) PV = $6,000 × (0.507) PV = $3,042.00 PV = $3,042.00 Calculator solution: $3,039.79 Calculator solution: $3,039.79 c. PV = FV 6 × (PVIF 12%,6 ) PV = $6,000 × (0.507) PV = $3,042.00 Calculator solution: $3,039.79 d. The answer to all three parts are the same. In each case the same questions is being asked but in a different way. P 416. a. A PV = $28,500 × (PVIF 11%,3 ) B PV = $54,000 × (PVIF 11%,9 ) PV = $28,500 × (0.731) PV = $54,000 × (0.391) PV = $20,833.50 PV = $21,114.00 Calculator solution: $20,838.95 Calculator solution: $21,109.94 C PV = $160,000 × (PVIF 11%,20 ) PV = $160,000 × (0.124) PV = $19,840.00 Calculator solution: $19,845.43 b. Alternatives A and B are both worth greater than $20,000 in term of the present value.Alternatives A and B are both worth greater than $20,000 in term of the present value....
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 Summer '11
 NICHOLS
 Finance, Time Value Of Money, Effective Interest Rate, Nominal Interest Rate, Calculator solution, ieff

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