Chapter 10 Solution

# 083 1 fv pmt 1000 008 324640 i the future

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Unformatted text preview: ars. n = 2(17) = 34, i = 6.4% 2 8 I/Y P/Y 1 ENTER (making C/Y = P/Y = 1) 3 N 0 PV 1000 + / – PMT CPT FV Ans: 3246.40 6.4 I/Y P/Y 2 ENTER (making C/Y = P/Y = 2) 34 N 0 PV 1000 + / – PMT CPT FV Ans: 59,942.63 = 3.2% (1 + i ) n − 1 FV = PMT i 34 1.032 − 1 = \$1000 0.032 = \$59,942.63 The client’s investments are worth \$59,942.63 today. 15. a. Given: PMT = \$500, n = 4(20) = 80, i = 8% 4 = 2% 1.02 80 − 1 (1 + i ) n − 1 FV = PMT = \$500 0.02 = \$96,885.98 i b. If, instead, i = 10% 4= 80 2.5% 1.025 − 1 FV = \$500 0.025 = \$124,191.36 Exercise 10.2 (continued) 17. The amount 5 years from now will be the combined future value of the \$20,000 already saved and the annual \$5000 contributions. That is, (1 + i ) n − 1 n FV = PV ( 1 + i ) + PMT i 1.0725 5 − 1 = \$20,000 (1.0725 ) 5 + \$5000 0.0725 = \$28,380.27 + \$28,897.48 = \$57,277.75 44 Business Mathematics in Canada, 7/e Exercise 10.2 (continued) 19. For the first 2 years, PMT = \$1200, n = 2(4) = 8, i = 10% = 2.5%. 4 The future value after 2 years is (1 + i ) n − 1 FV = PMT i 1.025 8 − 1 = \$1200 0.025 = \$10,483.34 10 I/Y P/Y 4 ENTER (making C/Y = P/Y = 4) 8 N 0 PV 1200 + / – PMT CPT FV Ans: 10,483.34 For the next 3 years, n = 4(3) = 12, % PV = \$10,483.34, PMT = \$1200, i = 94 = 2.25% The combined future value of these amounts at the end of the 3 years is (1 + i ) n − 1 FV = PMT + PV (1 + i ) n i Same P/Y, C/Y, PMT 9 I/Y 12 N 10483.34 + / – PV CPT FV Ans: 30,014.43 1.022512 − 1 12 = \$1200 0.0225 + \$10,483.34 (1.0225 ) = \$16,322.67 + \$13,691.77 = \$30,014.43 21. After 10 years, Marika's RRSP will be worth (1 + i ) n − 1 + PMT FV = PV (1 + i ) i 1.045 20 − 1 = \$18,000 (1.045 ) 20 + \$2000 0.045 = \$43,410.85 + \$62,742.85 = \$106,153.70 (continued) n 9 I/Y P/Y 2 ENTER (making C/Y = P/Y = 2) 20 N 18000 + / – PV 2000 + / – PMT CPT FV Ans: 106,153.70 Chapter 10: Ordinary Annuities: Future Value and Present Value 45 Exercise 10.2 (continued) 21. (continued) After a further 5 years, the RRSP will be worth 1.0075 60 − 1 FV = \$106,153.70 (1.0075 ) 60 + \$300 0.0075 = \$166,202.834 + \$22,627.241 = \$188,830.08 25...
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## This document was uploaded on 02/08/2014.

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