Suggested problems_Chp 4 sol

# Suggested problems_Chp 4 sol - Suggested problems for...

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Suggested problems for Chapter 4 - Solutions 1. (4.3) Simple interest is earned only on the principal. Interest earned = 1,000 x 2.5 x 0.08 = \$200 Future equivalent = 1,000 + 200 = \$1,200 2. (4.9) Find F given P. P = \$400, N = 40 years, i = 9% per year. Amount in account, F = P (F/P, 9%, 40) = 400 x (1.09) 40 = 400 (31.4094) = \$12,563.77 3. (4.13) Find P given F. F = \$10,000, N = 10 years, i = 5% year.

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Deposit, P = F (P/F, 5%, 10) = 10000 / (1.05) 10 = 10000 (0.6139) = \$6,139 4. (4.17) Find N, given all other factors. P = \$1,000, i = 15% per year, F = 4P = 4,000. Recall F = P (1+ i ) N Hence N = log (F/P) / log (1+ i ) = log (4)/log (1.15) = 9.92 years 10 years 5. (4.27) This is a case of find F given A. A = 1% of \$20,000 = \$200, i = 5%, N = 15 years Saved amount, F = A (F/A, 5%, 15) = 200 (1.05 15 – 1) / 0.05 = 200 (21.5786) = \$4315.72
6. (4.38) Find A given F. F = \$150,000, N = 20 years, i = 9% per year So A = F (A/F, 9%, 20) = 150,000 x 0.09 / (1.09 20 – 1) = 150,000 x 0.0195

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## This note was uploaded on 02/07/2012 for the course IE 343 taught by Professor Vincent,g during the Spring '08 term at Purdue University-West Lafayette.

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Suggested problems_Chp 4 sol - Suggested problems for...

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