373chapter1section7

373chapter1section7 - accomplish this goal, she will invest...

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Chapter 1, Section 7 27. You are given a(t) = 1 + 0.04t + 0.02(t2 -129 . Calculate v(8). 28. An investment account earns 6% simple interest. Calculate the amount the Grace must invest today to have 10,000 in 4 years. 29. An investment account earns 6% compound interest. Calculate the amount the Ryann must invest today to have 10,000 in 4 years. 30. You are given that v(t) = 1 . (t) Using this discount function, a payment of 200 to be made at time 10 has a present value of 100 at time 0. Calculate a(15). 31. Mojia must invest 1000 now in an account earning compound interest to have 2000 after Y years. How much must Mojia invest now to have 2000 after 2Y years. 32. Kayla wants to accumulate 50,000 at the end of 20 years. In order to accomplish this goal, she will invest P at the end of 10 years in an account that earns simple interest of 20%. Determine P. 33. Kayla wants to accumulate 50,000 at the end of 20 years. In order to
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Unformatted text preview: accomplish this goal, she will invest P at the end of 10 years in an account that earns compound interest of 20%. Determine P. 34. Calculate the present value of 1000 payable at the end of 15 years assuming compound interest at an annual effective rate of 9.5%. 35. The accumulated value of $1 invested 2 years ago less the present value of $1 to be paid in two years is equal to (4641/12100). Calculate i. 37. Kendrick Corporation invests X million today to build a factory. The factory is expected to produce the following profits: At the end of 4 years, the factory will be obsolete and will be closed. The Net Present Value of this project to Kendrick Corporation is 1 million at an interest rate of 8%. Calculate the Internal Rate of Return on this project. Answer: 27. 0.38760 28. 28. 8064.52 29. 7920.94 30. 2.5 31. 500 32. 30,000 33. 8075.28 34. 256.32 35. 10% 36. NPV=6.74 and IRR=17.2923% 37. 15.913%...
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This note was uploaded on 02/04/2012 for the course MA 373 taught by Professor Staff during the Spring '08 term at Purdue.

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373chapter1section7 - accomplish this goal, she will invest...

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