5 42 d 12275 33 c 4 12 9 iy py 12 enter

Info iconThis preview shows page 1. Sign up to view the full content.

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

Unformatted text preview: .5 Number of payments per year 4 i2 = (1 + i ) c − 1 = (1.045 ) 0.5 – 1 = 0. 022252415 1.022252415 20 − 1 FV = $400 0.022252415 = $9939.94 9 I/Y P/Y 2 ENTER (making C/Y = P/Y) 16 N 5000 PV 0 PMT CPT FV Ans: −10,111.85 Same I/Y, PV P/Y 4 ENTER C/Y 2 ENTER 20 N 400 PMT CPT FV Ans: −9939.94 Exercise 10.5 (continued) 19. The amount required to purchase the annuity is the present value of the payments discounted at the rate of return on the annuity. PMT = $2500, n = 12(20) = 240, i = 6.75%, Number of compoundin gs per year 6.75 I/Y 1 c= = = 0.08 3 P/Y 12 ENTER Number of payments per year 12 C/Y 1 ENTER c 0.08 3 – 1 = 0.00545813044 i2 = (1 + i ) − 1 = = (1.0675 ) 240 N 1 − ( 1 + i ) − n 2500 PMT PV = PMT 0 FV i CPT PV 1 − 1.0054581304 4 −240 Ans: −333,998.96 = $2500 0.0054581304 4 = $333,998.96 21. Selling price = Down payment + Present value of the monthly payments Given: PMT = $259.50; n = 12(3.5) = 42. 7.5 I/Y Then i = 7.5% = 7.5%, c = 11 = 0.083 , and 2 1 P/Y 12 ENTER i2 = (1 + i ) c − 1 = (1.075) 0.083 – 1 = 0.0060449190 C/Y 1 ENTER 1 − ( 1 + i ) − n 42 N PV = PMT 259.50 PMT i 0 FV CPT PV 7/e 70 Business Mathematics in Canada, Ans: –9600.00 1 − 1.006044919 −42 = $259.50 0.006044919 = $9600.00 Thus, the selling price was $2000 + $9600.00 = $11,600.00. Chapter 10: Ordinary Annuities: Future Value and Present Value 71 Exercise 10.5 (continued) 23. a. Plan A: Total contributions = 480($100) = $48,000 Plan B: Total contributions = 360($200) =$72,000 Plan C: Total contributions = 240($400) =$96,000 Therefore, A : B : C = 48 : 72 : 96 = 2 : 3 : 4 b. Comparing future values, A : B : C = $421,924 : $340,423 : $255,541 = 1.65 : 1.33 : 1 25. For the first 10 years, i = 6% 12 = 0.5%; PMT = $1500; n = 2(10) = 20; c = 12 2 = 0.16 6 I/Y P/Y 2 ENTER C/Y 12 ENTER 20 N 0 PV 1500 + / – PMT CPT FV Ans: 40,460.694 – 1 = 0.030377509 i2 = (1 + i ) − 1 = (1.005) and the future value at the end of the 8.5years is (1 + i ) n − 1 FV = PMT i c 0.16 1.030377509 20...
View Full Document

This document was uploaded on 02/08/2014.

Ask a homework question - tutors are online