Problems
inflation-free interest rate (i' ) will be 6% and
the general inflation rate I 5 %. If the plant
has a remaining useful life of five years. what is
the present equivalent value of its fuel costs,
using actual-dollar analysis?
4.14
4.17
A father w

Problems
2. Calculate the present worth of constant dollars by discounting at i'.
Adjusted-discount methodone step (use the market interest rate):
A
where
Alternatively, just use the market interest rate to find the net present
\ r/c: In these pi oblems.

107
Problems
3.36
What is the required quarterly payment to
repay a loan of $20,000 in 20 years if the interest rate is 8% compounded continuously?
3.37 A series of equal quarterly payments of
$1,500
extends over a period of 20 years. What is the
present

Problems
2 A restaurant is considering purchasing the lot adjacent
to
its business to provide adequate parking space for its
customers. The i restaurant needs to borrow $44,000 to
secure the lot. A deal has been made between a local
bank and the restauran

1O4
CHAPTER 3
Understanding Money Management
(b)
What is the future worth of the
$8,50
series of payments'?
0 following
in
15
(a) $5,000 at the end of each six-month period
years
for 10 years at 4% compounded
at
comp semiannually.
(b) $9.000 at the end of

Problems
3.1
8
pays 8% interest compounded quarterly. How
much money will be in each account six years
after the transfer?
A series of equal quarterly deposits of $1.000
extends over a period of three years. It is desired to compute the future worth of th

Problems
103
where r the APR. M the number of compounding periods, and
i = the effective interest rate.
In any equivalence problem. the interest rate to use is the effective interest
rate per payment period, which is expressed as
Where C the number of int

Problems
original bank note was for $4,800, with an interest rate of 12% compounded monthly. After l6
monthly payments, David found himself in a financial bind and went to a loan company for assistance in lowering his monthly payments.
Fortunately, the lo

Problems
(a) Compute the
Option 1.
monthly payment
for
(b) What is the effective annual interest
rate you are paying for Option 2?
Compute the outstanding balance for
each option at the end of five years.
(d) Compute the total interest payment for
each op

Problems
103
where r the APR. M the number of compounding periods, and
i = the effective interest rate.
In any equivalence problem. the interest rate to use is the effective interest
rate per payment period, which is expressed as
Where C the number of int

Problems
(a) Compute the
3.62
monthly payment for
Option 1.
(b) What is the effective annual interest
rate you are paying for Option 2?
Compute the outstanding balance for
each option at the end of five years.
(d) Compute the total interest payment for
ea

Problems
103
where r the APR. M the number of compounding periods, and
i = the effective interest rate.
In any equivalence problem. the interest rate to use is the effective interest
rate per payment period, which is expressed as
Where C the number of int

Problems
3.36 What is the required quarterly payment to
repay a loan of $20,000 in 20 years if the
in- terest rate is
8%
compounded
continuously?
3.37
A series of equal quarterly payments of $1,500
extends over a period of 20 years. What is the
present wo

CHAPTER 2
Time Value of Money
be in the account immediately after the fifth
(c) C = $394.65.
deposit.
(d) C = $458.90.
2.36 Five annual deposits in the amounts of
End of
$1,200,
$1,000, $800, $600, and $400 are made into a
fund that pays interest at a rat

CHAPTER 2
Time Value of Money
be in the account immediately after the fifth
(c) C = $394.65.
deposit.
(d) C = $458.90.
2.36 Five annual deposits in the amounts of $1,200,
$1,000, $800, $600, and $400 are made into a
fund that pays interest at a rate of 9%

70
CHAPTER 2
Time Value of Money
five years (with the first payment at the end of
year six). If the interest rate is 8% compounded annually, what is Bos contract worth at the
time of contract signing?
2.22 You are prepairing to buy a vacation home five
ye

Problems
(a) $5,000 at the end of each year for six years
at 6% compounded annually.
(b) $9,000 at the end of each year for nine
years at 7.25 % compounded annually.
(c) $12,000 at the end of each year for 25
years at 8% compounded annually.
(d) $6,000 at

CHAPTER 2
Time Value of Money
You have $10,000 available for investment in
stock. You are looking for a growth stock that
can grow your investment to $35,000 over five
years. What kind of growth rate are you looking for'?
$100
Short Case Studies with Exce

CHAPTER 2
Time Value of Money
3. Linear gradient series: A series of flows increasing or decreasing by a fixed
amount at regular intervals. Excel is one of the most convenient tools to
solve this type of cash flow series.
4. Geometric gradient series: A s

74
CHAPTER 2
Time Value of Money
2.50 From the accompanying cash flow diagram.
find the value of C that will establish economic
equivalence between the deposit series and
the withdrawal series at an interest rate of 8%
compounded annually.
l
Years
$5,000

74
CHAPTER 2
l
Time Value of Money
2.50 From the accompanying cash flow diagram.
find the value of C that will establish economic
equivalence between the deposit series and
the withdrawal series at an interest rate of 8%
compounded annually.
Years
$5,000

CHAPTER 2
Time Value of Money
3. Linear gradient series: A series of flows increasing or decreasing by a fixed
amount at regular intervals. Excel is one of the most convenient tools to
solve this type of cash flow series.
4. Geometric gradient series: A s

Problems
(a) $5,000 at the end of each year for six years
at 6% compounded annually.
(b) $9,000 at the end of each year for nine
years at 7.25 % compounded annually.
(c) $12,000 at the end of each year for 25
years at 8% compounded annually.
(d) $6,000 at

CHAPTER 2
Time Value of Money
You have $10,000 available for investment in
stock. You are looking for a growth stock that
can grow your investment to $35,000 over five
years. What kind of growth rate are you looking for'?
$100
Short Case Studies with Exce

70
CHAPTER 2
Time Value of Money
five years (with the first payment at the end of
year six). If the interest rate is 8% compounded annually, what is Bos contract worth at the
time of contract signing?
How much invested now at an interest rate of
9% compou