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Date Submitted: 08/09/2012 06:35 PM
Chapter 9; Page 278 #2. Page 279, #5, #10 Page 281, #30.
Chapter 10, Page 310 #2 Page 311 #12. Page 314 #29
CHAPTER 9)
PAGE 278 , PROBLEM 2:
What is the present value of:
a. $8,000 in 10 years at 6 percent? 8,000x.558=4,464
b. $16,000 in 5 years at 12 percent? 16,000x.567=9,072
c. $25,000 in 15 years at 8 percent? 25,000x.315=7,875
The formula is:
PV = FV × PVIF
TO GET PVIF USE APPENDIX B IN YOUR BOOK
PAGE 279, PROBLEM 5:
If you invest $12,000 today, how much will you have:
a. In 6 years at 7 percent? 12,000x1.501=18,012
b. In 15 years at 12 percent? 12,000 x5.474=65,688
c. In 25 years at 10 percent? 12,000 x10.835=130,020
d. In 25 years at 10 percent (compounded semiannually)? 12,000x11.467=137,609
Remember for d that if it is compounded semiannually you need to divide the percentage rate of return by 2 and multiply the number of years by 2 and solve using that % and that amount of time.
The formula is:
FV = PV × FVIF
TO GET FVIF USE APPENDIX A IN YOUR BOOK
PROBLEM 10:
How much would you have to invest today to receive:
a. $12,000 in 6 years at 12 percent? 12,000x.507=6,084
b. $15,000 in 15 years at 8 percent? 15,000x.315=4,725
c. $5,000 each year for 10 years at 8 percent? 5,000x6.710=33,550
d. $40,000 each year for 40 years at 5 percent? 40,000x17.159=686,360
FOR QUESTIONS A and B use the Formula:
PV = FV × PVIF
TO GET PVIF USE APPENDIX B IN YOUR BOOK
For questions C and D use the Formula:
PV = A (the annuity) × PVIFA
TO GET PVIFA USE APPENDIX D IN YOUR BOOK
PAGE 281, PROBLEM 30:
You need $23,956 at the end of nine years, and your only investment outlet is an 7 percent long-term certificate of deposit (compounded annually). With the certificate of deposit, you make an initial investment at the beginning of the first year.
a. What single payment could be...