Ch.9_Solution_Manual_Ed.1_v4_

# Ch.9_Solution_Manual_Ed.1_v4_ - Exercises 9.1 Calculate the...

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

Exercises 9.1 Calculate the missing values for Problems 1 and 2 Exercise 9.1, Solution 1: Nominal Interest Rate, Compounding Frequency, and Time Period Number of compounding periods per year ( m ) Periodic Interest Rate ( i ) Terms in Years (t) Number of Compounding Periods for the Term (n) a. 5% compounded semi- annually for 2 years 2 2.5% 2 years 4 b. 11.4% compounded quarterly for 1 year and 6 months 4 2.85% 1 year and 6 months 6 c. 8.4% compounded monthly for 1 year and 7 months 12 0.70% 1 year and 7 months 19 d. 7.3% compounded daily for 120 days 365 0.02% 120 a. j = 5% = 0.05, m = 2 = 0.025 = 2.5% t = 2 years = 4 b. j = 11.4% = 0.114, m = 4 = 0.0285 = 2.85% t = 1 year and 6 months = 6 c. i = 0.7% = 0.007, m = 12 j = i × m = 0.007 × 12 = 0.084 = 8.4% compounded monthly t = 1 year and 7 months = 19 d. i = 0.02% = 0.0002, m = 365 j = i × m = 0.0002 × 365 = 0.073 = 7.3% compounded daily t = 120 days = years = 120 Exercise 9.1, Solution 3: i = 2.2% = 0.022, m = 12, j = i × m = 0.022 × 12 = 0.264 = 26.4% compounded monthly Therefore the nominal interest rate is 26.4% compounded monthly. Exercise 9.1, Solution 5: j = 4.28% = 0.0428, i = 2.14% = 0.0214, i = j / m , = 2

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

View Full Document
Therefore, the compounding frequency is semi-annually. Exercise 9.1, Solution 7: t = 6 years, m = 2, n = m × t = 2 × 6 = 12 Therefore, the number of compounding periods is 12. Exercise 9.1, Solution 9: t = 16 years and 6 months = 16 + = 16.5, n = 66, n = m × t m = = = 4 Therefore, the compounding frequency is quarterly. Exercise 9.1, Solution 11: i = 2.25%, j = 4.5% = 2 n = m × t = 2 × 8 = 16 Therefore, there are 16 compounding periods. Exercise 9.1, Solution 13: i = 0.5% = 0.005, n = m × t = 4 j = m × i = 4 × 0.005 = 0.02 = 2% Therefore, the nominal interest rate of the loan is 2%. 2
Exercises 9.2 Calculate the missing values for Problems 1 and 2: Exercise 9.2, Solution 1: Present Value ( PV ) Nominal Interest Rate ( j ) Compounding Frequency ( m ) Time Period ( t ) Periodic Interest Rate ( i ) Number of Compounding Periods ( n ) Future Value ( FV ) a. \$1000.00 5.11% 2 5 years and 6 months 2.555% 11 \$1319.85 b. \$3550.50 4.65% 4 2 years and 3 months 1.1625% 9 \$3939.72 c. \$16,500.0 0 6.30% 12 219 days 0.525% 7.2 \$17,133.94 d. \$9650.75 6.57% 1 11 years and 3 months 6.57% 11.25 \$19,744.88 a. PV = \$1000, t = 5 years and 6 months = 5.5 years, j = 5.11% = 0.0511, m = 2, = 0.02555 = 2.555% n = m × t = 2 × 5.5 = 11 FV = PV (1 + i ) n = 1000 (1 + 0.02555) 11 = 1319.851981. .. = \$1319.85 N I/Y P/Y C/Y PV PMT FV 11 5.11 2 2 –1000 0 ? FV (calculator) = 1319.851981 b. PV = \$3550.50, t = 2 years and 3 months = 2 + = 2.25 years, i = 1.1625% = 0.011625, m = 4 j = i × m = 0.011625 × 4 = 0.0465 = 4.65% n = m × t = 4 × 2.25 = 9 FV = PV (1 + i ) n = 3550.50 (1 + 0.011625) 9 = 3939.721274. .. = \$3939.72 N I/Y P/Y C/Y PV PMT FV 9 4.65 4 4 –3550.50 0 ? FV

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.

## This note was uploaded on 04/04/2012 for the course MATH 1052 taught by Professor Kit during the Winter '12 term at Fanshawe.

### Page1 / 47

Ch.9_Solution_Manual_Ed.1_v4_ - Exercises 9.1 Calculate the...

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

View Full Document
Ask a homework question - tutors are online