Chapter 10 Solution

# The interval between the date of the loan and the

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Unformatted text preview: r 7 years and 9 months (rounded to the nearest month.) Since, the first withdrawal occurs 6 months after the period of deferral, the \$10,000 deposit must be made 8 years and 3 months before the first withdrawal. 64 Same I/Y, P/Y, C/Y 10000 + / – PV 0 PMT 19077.27 FV CPT N Ans: 15.52 Business Mathematics in Canada, 7/e Exercise 10.5 1. Given: j1 = 7%; m1 = 1; i1 = a. For m2 = 2, c = m1 m2 = 1 2 7% 1 b. For m2 = 4, c = i2 = (1 + i1 ) − 1 = 1 4 ÷ = 1 12 = (1.07) 0.083 – 1 = 0.00565 = 1.706% 2nd ICONV 7 ENTER ↑ 1 ENTER ↑ CPT ↓ 4 ENTER ↓ CPT 2= Ans: 3.441 m1 m2 c = (1.07 ) 0.25 – 1 = 0.01706 = 3.441% 2nd ICONV 7 ENTER ↑ 1 ENTER ↑ CPT ↓ 2 ENTER ↓ CPT c. For m2 = 12, c = i2 = (1 + i1 ) − 1 c = (1.07 ) 0.5 – 1 = 0.03441 ÷ m1 m2 i2 = (1 + i1 ) − 1 c = 7% 4= Ans: 1.706 = 2nd ICONV 7 ENTER ↑ 1 ENTER ↑ CPT ↓ 12 ENTER ↓ CPT ÷ 12 = Ans: 0.565 0.565% The periodic interest rates are (a) 3.441% per half year; (b) 1.706% per quarter; and (c) 0.565% per month . 3. Given: j1 = 8%; m1 = 4; i1 = a. For m2 = 1, c = m1 m2 = i2 = (1 + i1 ) − 1 c = (1.02) 4 – 1 = 0.08243 = 8.243% 4 1 8% 4 = 2% b. For m2 = 2, c = m1 m2 = 4 2 i2 = (1 + i1 ) − 1 c = (1.02) 2 – 1 = 0.04040 = 4.040% c. For m2 = 12, c = m1 m2 = 4 12 i2 = (1 + i1 ) − 1 c = (1.02) 0.3 – 1 = 0.00662 = 0.662% 2nd ICONV 2nd ICONV 2nd ICONV 8 ENTER 8 ENTER 8 ENTER ↑ 4 ENTER ↑ 4 ENTER ↑ 4 ENTER ↑ CPT ↑ CPT ↑ CPT ↓ 1 ENTER ↓ 2 ENTER ↓ 12 ENTER ↓ CPT ↓ CPT CPT Chapter 10: OrdinaryAnnuities: Future ÷ 2 = Value and Present Value ÷ 12 = ÷ 1 = Ans: 8.243 Ans: 4.040 Ans: 0.662 65 The periodic interest rates are (a) 8.243% per year; (b) 4.040% per half year; and (c) 0.662% per month . Exercise 10.5 (continued) 5. Given: PMT = \$1000, Term = 25 i = 6% a. m = 1, n = 1(25) = 25 (1 + i ) n − 1 FV = PMT i 25 1.06 − 1 = \$1000 0.06 = \$54,864.51 b. m1 = 2, i1 = c= m1 m2 6% 2 6 I/Y P/Y 1 ENTER (making C/Y = P/Y = 1) 25 N 0 PV 1000 + / – PMT CPT FV Ans: 54,864.51 = 3%, m2 = 1 =...
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## This document was uploaded on 02/08/2014.

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