This preview shows pages 1–4. Sign up to view the full content.
This preview has intentionally blurred sections. Sign up to view the full version.
View Full DocumentThis preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
Unformatted text preview: Some solutions for concise 5th edition 29 a. 1   $500(1.06) = $530.00.500 FV = ? Using a financial calculator, enter N = 1, I/YR = 6, PV = 500, PMT = 0, and FV = ? Solve for FV = $530.00. b. 1 2    $500(1.06) 2 = $561.80.500 FV = ? Using a financial calculator, enter N = 2, I/YR = 6, PV = 500, PMT = 0, and FV = ? Solve for FV = $561.80. c. 1   $500(1/1.06) = $471.70. PV = ? 500 Using a financial calculator, enter N = 1, I/YR = 6, PMT = 0, and FV = 500, and PV = ? Solve for PV = $471.70. d. 1 2    $500(1/1.06) 2 = $445.00. PV = ? 500 Using a financial calculator, enter N = 2, I/YR = 6, PMT = 0, FV = 500, and PV = ? Solve for PV = $445.00. 210 a. 1 2 3 4 5 6 7 8 9 10            $500(1.06) 10 = $895.42.500 FV = ? Using a financial calculator, enter N = 10, I/YR = 6, PV = 500, PMT = 0, and FV = ? Solve for FV = $895.42. b. 1 2 3 4 5 6 7 8 9 10            $500(1.12) 10 = $1,552.92.500 FV = ? Using a financial calculator, enter N = 10, I/YR = 12, PV = 500, PMT = 0, and FV = ? Solve for FV = $1,552.92. 6% 6% 6% 6% 6% 12% c. 1 2 3 4 5 6 7 8 9 10            $500/(1.06) 10 = $279.20. PV = ? 500 Using a financial calculator, enter N = 10, I/YR = 6, PMT = 0, FV = 500, and PV = ? Solve for PV = $279.20. 6% d. 1 2 3 4 5 6 7 8 9 10            PV = ? 1,552.90 $1,552.90/(1.12) 10 = $499.99. Using a financial calculator, enter N = 10, I/YR = 12, PMT = 0, FV = 1552.90, and PV = ? Solve for PV = $499.99. $1,552.90/(1.06) 10 = $867.13. Using a financial calculator, enter N = 10, I/YR = 6, PMT = 0, FV = 1552.90, and PV = ? Solve for PV = $867.13. e. The present value is the value today of a sum of money to be received in the future. For example, the value today of $1,552.90 to be received 10 years in the future is about $500 at an interest rate of 12%, but it is approximately $867 if the interest rate is 6%. Therefore, if you had $500 today and invested it at 12%, you would end up with $1,552.90 in 10 years. The present value depends on the interest rate because the interest rate determines the amount of interest you forgo by not having the money today. 211 a. 2000 2001 2002 2003 2004 2005      6 12 (in millions) With a calculator, enter N = 5, PV = 6, PMT = 0, FV = 12, and then solve for I/YR = 14.87%....
View
Full
Document
 Spring '07
 Chen

Click to edit the document details