HW2-Part3-Valerie,Azor,Joaquin,Miguel-Sec02

# HW2-Part3-Valerie,Azor,Joaquin,Miguel-Sec02 - FINANCIAL...

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FINANCIAL MATHEMATICS HOMEWORK 2: PART 3 HOMEWORK 2 Universidad Iberoamericana UNIBE 3 Financial Mathematics Professor Osvaldo Lagares Homework 2-Part 3 Valerie Bodden Kluge (10-0014) Azor Hazoury (10-1192) Joaquin Castillo (10-0084) Miguel Iglesias (10-0085) February 15 2011 Santo Domingo, Dominican Republic SILABO – GERENCIA EMPRESARIAL Page 1 of 34

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Universidad Iberoamericana UNIBE Due Date: February 15, 2011 Deliver hard copy at the beginning of class. Note: In all the problems set, even though those who involve multiple choices questions, the student must provide a clear mathematical argument for the response. Otherwise a partial credit will be given for correct answers. Chapter 3 Exercise 3.1: 24, 26, 28, 30, 32, 34, 36, 38 Exercise 3.2: 24, 26, 28, 30, 36 Exercise 3.3: 34, 36, 38, 40, 42, 44, 46, 48 Exercise 3.4: 6, 8, 10 Page 2 of 34
Exercise 3.5: 2, 4, 6, 8, 12, 14, 16 Chapter 4 Exercise 4.1: 26, 28, 30 Exercise 4.2: 1, 2, 3, 13, 22, 24, 28, 32, 34, 36, 38, 40, 42 Exercise 4.3: 10, 12, 14, 16 Exercise 4.4: 1, 6, 8, 18, 20, 24, 26, 32, 34, 36, 40 Exercise 4.5: 1, 4, 8, 10, 14, 18 Exercise 4.6: 1, 2, 6, 8, 10 Exercise 4.7: 1, 3, 5, 7, 9, 11, 15, 16 Chapter 3: Exercise 3.1: 24) An alternative way of looking at the effect of time and rate would be to look at things from the point of view of accumulating a specific target future value. The higher the rate and the longer the time, less the money you need to deposit in order to achieve the same result. Fill in the table below by calculating the present value needed to grow to \$100,000 at the interest rate given by the row and the period of time given by the column. For example, the first entry is filled for you, showing the amount needed to grow to 100,000 in 5 years at 3% compound interest. 5 years 10 years Page 3 of 34

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20 years 40 years 3% \$86,260.88 74,409.4 55,367.6 30,655.7 6% 74,725.8 55,839.5 31,180.5 9,722.23 9% 64,993.1 42,241.0 17,843.1 3,183.76 12% 56,742.7 32,197.3 10,336.7 Page 4 of 34
1,740.68 Page 5 of 34

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PV= FV/(1+R) n 5 years- 6% : PV=100,000/(1+0.06) 5 PV= 100,000/1.33823 PV=74,725.8 5 years- 9% PV=100,000/(1+0.05) 5 PV=100,000/1.53862 PV=64,993.1 5 years -12% PV=100,000/(1+0.12) 5 PV=100,000/1.76234 PV=56,742.7 10 years- 3% PV=100,000/(1+0.03) 10 PV=100,000/1.34392 PV=74,409.4 10 years- 9 % PV=100,000/(1+0.09) 10 PV=100,000/2.36736 PV=42,241 10 years- 6% Page 6 of 34
PV=100,000/(1+0.06) 10 PV=100,000/1.79085 PV=55,839.5 10 years-12% PV=100,000/(1+0.12) 10 PV=100,000/3.1058 PV=32,197.3 20 years- 3% PV=100,000/(1+0.03) 20 PV=100,000/1.80611 PV=55,367.6 20 years- 6% PV=100,000/(1+0.06) 20 PV=100,000/3.20714 PV=31,180.5 20 years - 9% PV=100,000/(1+0.09) 20 PV=100,000/5.60441 PV=17,843.1 20 years-12% PV=100,000/(1+0.12) 20 PV=100,000/9.64629 PV=10,336.7 40 years -3% PV=100,000/(1+0.03) 40 PV=100,000/3.26204 PV=30,655.7 Page 7 of 34

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40 years- 6% PV=100,000/(1+0.06) 40 PV= 100,000/10.2857 PV= 9,722.22 40 years- 9% PV=100,000/(1+0.09) 40 PV=100,000/31.4094 PV=3,183.7 40 years- 12% PV=100,000/(1+0.12)
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HW2-Part3-Valerie,Azor,Joaquin,Miguel-Sec02 - FINANCIAL...

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