{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Suggested problems_Chp 4 sol

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

This preview shows pages 1–4. Sign up to view the full content.

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.

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

View Full Document
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 = \$2925 7. (4.56) This question is different in that we are dealing with 2 annuities. As we did in class, we first find the value of the deferred annuity before withdrawal begins. We can then

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

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### Page1 / 4

Suggested problems_Chp 4 sol - Suggested problems for...

This preview shows document pages 1 - 4. Sign up to view the full document.

View Full Document
Ask a homework question - tutors are online