Submitted by: Submitted by reeveskl28
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Category: Business and Industry
Date Submitted: 08/05/2012 07:46 PM
EXERCISE 6-4 (15–20 minutes)
(a) | Future value of an ordinary annuity of $5,000 a period for 20 periods at 8% |
$228,809.80 |
($5,000 X 45.76196) |
| Factor (1 + .08) | X 1.08 | |
| Future value of an annuity due of $5,000 a period at 8% |
$ 247,115 | |
(b) | Present value of an ordinary annuity of $2,500 for 30 periods at 10% |
$ 23,567.28 |
($2,500 X 9.42691) |
| Factor (1 + .10) | X 1.10 | |
| Present value of annuity due of $2,500 for 30 periods at 10% | $ 25,924 | (Or see Table 6-5 which gives $25,924.03) |
(c) | Future value of an ordinary annuity of $2,000 a period for 15 periods at 10% | $ 63,544.96 | ($2,000 X 31.77248) |
| Factor (1 + 10) | X 1.10 | |
| Future value of an annuity due of $2,000 a period for 15 periods at 10% | $ 69,900 | |
| | | |
(d) | Present value of an ordinary annuity of $3,000 for 6 periods at 9% | $ 13,457.76 | ($3,000 X 4.48592) |
| Factor (1 + .09) | X 1.09 | |
| Present value of an annuity due of $3,000 for 6 periods at 9% | $ 14,669 | (Or see Table 6-5) |
| PROBLEM 6-10 | |
1. Purchase.
Time diagrams:
Installments
i = 10%
PV – OA = ?
R =
$350,000 $350,000 $350,000 $350,000 $350,000
| | | | |
| | | | |
0 1 2 3 4 5
n = 5
Property taxes and other costs
i = 10%
PV – OA = ?
R =
$56,000 $56,000 $56,000 $56,000 $56,000 $56,000
| | | | | | | |
| | | | | | | |
0 1 2 9 10 11 12
n = 12
PROBLEM 6-10 (Continued)
Insurance
i = 10%
PV – AD = ?
R =
$27,000 $27,000...