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**Unformatted text preview: **i ) −n PV = PMT i −20 1 − 1.05 = $1000 0.05 = $12,462.21
Similarly,
b. For i = 10%, PV = $8513.56
c. For i = 11%, PV = $7963.33
d. For i = 15%, PV = $6259.33 5. Given: i = 8% = 0. 6 %; PMT = $75,
12
n = 12(2.5) = 30
1 − ( 1 + i ) −n PV = PMT i 1 − 1.00 6 −30 = $75 0.00 6 = $2033.16
7. Given: i = 6% = 0.5%; PMT =
12
$175,
n = 12(8.25) = 99
1 − ( 1 + i ) −n PV = PMT i −99 1 − 1.005 = $175 0.005 = $13,638.69 5 I/Y P/Y 1 ENTER (making C/Y = P/Y = 1)
20 N 1000 PMT
0 FV CPT PV Ans: –12,462.21 8 I/Y P/Y 12 ENTER (making C/Y = P/Y = 12)
30 N 75 PMT
0 FV CPT PV Ans: –2033.16 6 I/Y P/Y 12 ENTER (making C/Y = P/Y = 12)
99 N 175 PMT
0 FV CPT PV Ans: –13,638.69 The investor would pay $13,638.69 to
purchase the contract. 50 Business Mathematics in Canada, 7/e Exercise 10.3 (continued)
9. Given: i = 9.9% = 4.95%;
2
PMT = $1240, n = 2(9.5) =
19 9.9 I/Y P/Y 2 ENTER (making C/Y = P/Y = 2)
19 N 1240 + / – PMT
0 FV CPT PV Ans: 15,047.05 1 − ( 1 + i ) −n PV = PMT i 1 − 1.0495 −19 = $1240 0.0495 = $15,047.05
The current balance on the loan is $15,047.05.
11. Given: PMT = $2000 per year; term
= 10 years;
j = 7% compounded
annually
1 − ( 1 + i ) −n PV = PMT i −10 1 − 1.07 = $2000 0.07 7 I/Y P/Y 1 ENTER (making C/Y = P/Y = 1)
10 N 2000 PMT
0 FV CPT PV Ans: –14,047.16 = $14,047.16 13. Given: i =
= 4(7) = 28 6%
4 = 1.5%; PMT = $2500, 1 − ( 1 + i ) −n PV = PMT i −28 1 − 1.015 = $2500 0.015 6 I/Y P/Y 4 ENTER (making C/Y = P/Y = 4)
28 N 2500 PMT
0 FV CPT PV Ans: –56,816.79 n = $56,816.79 Exercise 10.3 (continued)
15. Given: Term = 20 years; j = 4.8% compounded
monthly;
PMT = $1000 per month
Therefore, i = 4.8% = 0.4% and n = 12(20) = 240
12
The amount required to purchase the annuity
is its present value.
1 − ( 1 + i ) −n PV = PMT i 4.8 I/Y P/Y 12 ENTER (making C/Y = P/Y = 12)
240 N 1000 PMT
0 FV CPT PV Ans: –154,093.30 Chapter 10: Ordinary Annuities: Future Value and Present Value 51 1 − 1.004 −240 = $154,093.30
= $1000 0.004 17. The amoun...

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