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Answers to Homework-Ch6toCh10-F08

# Answers to Homework-Ch6toCh10-F08 - Answers to Assigned...

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Answers to Assigned Homework…………….Ch 6 thru Ch 10 FALL, 2008 Ch 6 6-1 C = \$15 + \$15 (A/G, 10%, 4) = \$15 + \$15 (1.381) = \$35.72 6-5 A = \$100 (A/P, 3.5%, 3) = \$100 (0.3569) = \$35.69 6-7 F = A (F/A, 1.25%, 480) (F/P, 1.25%, 20) + A (F/A, 1.25%, 20) = A [(31,017) (1.282) + 22.6] = A (39,786) A = \$1,000,000/39,786 = \$25.13 6-8 A = F[(e r −1)/(e m − 1)] = \$5 × 10 6 [(e 0.15 − 1)/(e (0.15)(40) − 1)] = \$5 × 10 6 [0.161834/402.42879] = \$2,011 6-10 \$500 = D (F/A, 12%, 3) + 0.5D + D (P/A, 12%, 2) = D (3.374 + 0.5 + 1.690) D = \$500/5.564 = \$89.86 6-26 Alternative A EUAC = A = [\$2,000 + \$500 (P/F, 12%, 1)] (A/P, 12%, 5) = [\$2,000 + \$500 (0.8929)] (0.2774) = \$678.65 Alternative B EUAC = A = \$3,000 (F/P, 12%, 1) (A/F, 12%, 5) = \$3,000 (1.120) (0.1574) = \$528.86 To minimize EUAC, select B. ===================================================

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Ch 7 7-1 \$100 = \$27 (P/A, i%, 10) (P/A, i%, 10) = 3.704 Performing Linear Interpolation: ( P/A, i%, 10) I 4.192 20% 3.571 25% Rate of Return = 20% + (5%) [(4.192 − 3.704)/(4.912 − 3.571)] = 23.9% 7-2 (a) F = \$5, P = \$1, n = 5 F = P (1 + i) n \$5 = \$1 (1 + i) 5 (1 + i) = 5 0.20 = 1.38 i * = 38% (b) For a 100% annual rate of return F = \$1 (1 + 1.0) 5 = \$32, not \$5! Note that the prices diagonal charges do not necessarily reflect what anyone will pay a collector for his/her stamps. 7-4 The rate of return exceeds 60% so the interest tables are not useful. F = P (1 + i) n \$25,000 = \$5,000 (1 + i) 3 (1 + i) = (\$25,000/\$5,000) 1/3 = 1.71 i * = 0.71 Rate of Return = 71% 7-6 1991 − 1626 = 365 years = n F = P (1 + i) n 12 × 10 9 = 24(1 + i) 365 (1 + i) 365 = 12 x 10 0 /24 = 5.00 × 10 8 This may be immediately solved on most hand calculators: i * = 5.64% Solution based on compound interest tables: (F/P, i%, 365) = 5.00 × 10 8 = (F/P, i%, 100) (F/P, i%, 100) (F/P, i%, 100) (F/P, i%, 65) Try i = 6% (F/P, 6%, 365) = (339.3) 3 (44.14) = 17.24 × 10 8 (i too high) Try i = 5% (F/P, 5%, 365) = (131.5) 3 (23.84) = 0.542 × 10 8 (i too low) Performing linear interpolation: i * = 5% + (1%) [((5 − 0.54) (10 8 ))/((17.24 − 0.54) (10 8 ))] = 5% + 4.46/16.70 = 5.27% The linear interpolation is inaccurate.
7-10 3,000 = 30 (P/A, i * , 120) (P/A, i * , 120) = 3,000/30 = 100 Performing Linear Interpolation: ( P/A, i%, 120) I 103.563 ¼% 90.074 ½% i * = 0.0025 + 0.0025 [(103.562 − 100)/(103.562 − 90.074)] = 0.00316 per month Nominal Annual Rate = 12 (0.00316) = 0.03792 = 3.79% 7-20

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Answers to Homework-Ch6toCh10-F08 - Answers to Assigned...

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