Module8HWSol - as: ? 6.8 , 0.5%,32 . And the equivalent of...

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Chapter 4: Drill Problems 2, 5, 7, 12 and Application Problem 1. Drill Problems: 5. Note that in this question, the equations cannot be directly applied. First, an equivalent cash flow for the period five should be computed. The requires treating the cash flow at the period five as a future value for period 1 through 4 and as a present value for period 6 through 7. 7. Note that it is not quite straightforward to compute the interest rate. One can either do it through try-and-error or through the Excel-solver. 12.
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Application Problems: (a) Note that it is asking for the value of one month before the first payment. So the P/A interest factor directly applies. ° = ?±² 6.8 ³ , ´ = 25% and ? = 47 , and µ is: (b) ° = ?±² 6.8 ³ , ´ = 25% and ? = 47 , and is: (c) Again, the equivalent value at the period 14 is the summation of the value before the period 14 and that after it. (d) The equivalent of single payment of cash flows before the period 32 can be computed
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Unformatted text preview: as: ? 6.8 , 0.5%,32 . And the equivalent of single payment for cash flows occurring after the period 32 can be computed as: ? 6.8 ( , 0.5%,15) . The summation of these two values can thus be used to compute the annual equivalent monthly payment for the periods from 20 to 32. (e) It is easier if the cash flows under the same interest rate are considered together. For example, consider the cash flows occurring after 20 periods. The value of the cash flow by the period 20 can be computed as: = ? 6.8 , 0.75%,27 . However, it should not be directly counted into the present value at the period 0; instead, it should be discounted through the periods with interest rate 0.50% and 0.25% (f) 0.25% 0.50% 0.75% 1 2 10 11 12 20 21 22 47...
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This note was uploaded on 01/11/2012 for the course EIN 4354 taught by Professor Tufecki during the Fall '08 term at University of Florida.

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Module8HWSol - as: ? 6.8 , 0.5%,32 . And the equivalent of...

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