EGM 320- Spring 2008
Quiz # 2 – Solutions
There are a number of ways you can solve some of these problems
Note: You can use Excel workbook to calculate factors such as (P/F) and (P/A) etc..
1.
E
P
= 5400(P/F,5%,6)
= 5400*0.7462 = $4029
6
7
8
9
10
11
2.
A
F=?
4 Years
First year
future value
F
= 5400(F/P,5%,
4
) = 5400*1.2155 = $6564
Beginning of 11 year is end of 10
th
year. See
figure.
3.
B
P
= 100(P/A,5%,3) + 100*(P/F,5%,6) = 347
4.
E
F
= 100(P/A,5%,3)*(F/P,5%,6)
+ 100 = 465
5.
B
See Pg. 108
10,000 = 5000(P/F,5%,N)
2
= (1+ i )
N
ln (2)
= N ln(1.05)
⇒
N = 14.21
6.
C
P
1
= -10,000 + 5000(P/A,10%,4) = 5850
This must be equivalent to Cash flow 2, so we can find the value of X.
∴
P
2
= 5850 = X + 3500(P/A,10%,4)+1000(P/G,10%,4)
= X + 15472.75
Which
⇒
X
= -9623
7.
D
F = [F
1
– F
2
]* (F/P,6%,1)
Now F
1
= 1600(F/A, 6%, 6)
{Uniform} and F
2
= 300(P/G, 6%, 6)*(F/P, 6%, 6)
Present value of Geometric flow * Future value of the present
(but since it is beginning of the 7
th
year, it is the end of six years)
Such that F = 6283*1.06 = 6660
8.
B
Now Value at the age of 17 must be equivalent

This
** preview**
has intentionally

**sections.**

*blurred***to view the full version.**

*Sign up*