HW_12_Solutions

HW_12_Solutions - of $800,000 to be received in 5 years...

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Solutions to Homework 12 Due November 30, 2010 Raffaele B. Mari, CPA Econ 25 – Econ of Acctg. BRIEF EXERCISE C-3 FV = p X FV of 1 factor = $8,000 X 1.60103 = $12,808.24 BRIEF EXERCISE C-4 FV of an annuity of 1 = p X FV of an annuity factor = $75,000 X 12.57789 = $943,341.75 BRIEF EXERCISE C-8 (a) i = 10% ? $30,000 0 1 2 3 4 5 6 7 8 9 Discount rate from Table 3 is .42410 (9 periods at 10%). Present value of $30,000 to be received in 9 years discounted at 10% is therefore $12,723 ($30,000 X .42410). (b) i = 9% ? $30,000 $30,000 $30,000 $30,000 $30,000 $30,000 0 1 2 3 4 5 6 Discount rate from Table 4 is 4.48592 (6 periods at 9%). Present value of 6 payments of $30,000 each discounted at 9% is therefore $134,577.60 ($30,000 X 4.48592).
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Solutions to Homework 12 Due November 30, 2010 Raffaele B. Mari, CPA Econ 25 – Econ of Acctg. BRIEF EXERCISE C-9 i = 9% ? $800,000 0 1 2 3 4 5 Discount rate from Table 3 is .64993 (5 periods at 9%). Present value
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Unformatted text preview: of $800,000 to be received in 5 years discounted at 9% is therefore $519,944 ($800,000 X .64993). Concord Company should therefore invest $519,944 to have $800,000 in five years. BRIEF EXERCISE C-13 i = 4% ? $400,000 Diagram for Principal 0 1 2 3 4 19 20 i = 4% ? $18,000 $18,000 $18,000 $18,000 $18,000 $18,000 Diagram for Interest 0 1 2 3 4 19 20 Present value of principal to be received at maturity: $400,000 X 0.45639 (PV of $1 due in 20 periods at 4% from Table 3) . ............................................................. $182,556 * Present value of interest to be received periodically over the term of the bonds: $18,000 X 13.59033 (PV of $1 due each period for 20 periods at 4% from Table 4) . ....................................................................... 244,626* Present value of bonds . .............................................................. $427,182* *Rounded....
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This note was uploaded on 12/13/2011 for the course ECON 15A taught by Professor Shirey during the Fall '08 term at UC Irvine.

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HW_12_Solutions - of $800,000 to be received in 5 years...

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