240ch23exer15-17 - CHAPTER 23 EXERCISES

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
CHAPTER 23 EXERCISES Now that we have worked PV-FV problems both forwards and backwards, these problems should be  fairly easy. EXERCISE 23-15 1. Although this exercise is worded differently than some of the ones we have done; it is  basically a PV problem.  We should be willing to pay no more than the PV of the  additional income the machine promises. $10,000 X 8.2438 (PV-annuity table) = $82,438 2. At an 8% rate, Audrey would need to own the car for approximately 35 years to save  enough money on gasoline expenses to offset the initial cost of the car.  The $14,000 is the  initial present value to be offset by annual savings of $1,200.  Therefore, $14,000/$1,200  = 11.667.  I then go to the PV annuity table, go to the 8% column, go down until I find a  number close to 11.667, and see that is between 30 and 40 years.   EXERCISE 23-16 1. The $250,000 is the PV.  We must therefore compute the PV of the $30,000/yr.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 10/16/2011 for the course ACC 240 taught by Professor Sidneyford during the Fall '10 term at Chandler-Gilbert Community College.

Page1 / 2

240ch23exer15-17 - CHAPTER 23 EXERCISES

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online