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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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