Ch 4 homework solutions

# Ch 4 homework solutions - BUSINESS FINANCE CHAPTER 4...

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Unformatted text preview: BUSINESS FINANCE CHAPTER 4 HOMEWORK SOLUTIONS P4-4. 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 P4-12. 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 4-16. 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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Ch 4 homework solutions - BUSINESS FINANCE CHAPTER 4...

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