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EGM-Q02-soln

# EGM-Q02-soln - EGM 320 Spring 2008 Quiz 2 Solutions There...

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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

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