Problem 4-3
Future value of 10,000
A.
Years 3
Interest rate 10.00%
13310
B.
Years 6
Interest rate 10.00%
17715.61
C.
Years 3
Interest rate 20.00%
17280
Problem 4-4
Present value of $ 12,000.00
A.
Years 12
Interest rate 4.000%
$ 7,495.16
B.
Years 24
Interest rate 8.00%
$ 1,892.39
C.
Years 6
interest rate 2.00%
$ 10,655.66
Problem 4-5
Today $ 72,000.00
Future 8 years $ 120,000.00
Interest rate 5.000%
PV= $ 73,669.59
Problem 4-6
A,B,C 16%
One year $ 140.00
five year $ 250.00
ten year $ 320.00
Problem 4-7
Invest $800
Interest per year 6.00%
Interest
Compound interest $5,000.82
Simple interest $1,632.00
$3,368.8202
SHIV's EXAMPLE
n
r
pv
interest if in simple interest
fv if invested in simple
fv if invested in compound
interest if in compound
int on int
Problem 4-8
Daughter 9
She will go university in 9
Registered education savings plan(RESP) $ 129,000.00
Fixed Interest rate 10%
PV $ 54,708.5928
Problem 4-9
Retirement immediately $ 250,000.00
Five years $ 350,000.00
A. 0%
$350,000.00
B. 8%
$238,204.12
C. 20%
$140,657.15
Problem 4-10
Before 18 years
now 18 years
Account has $ 6,343.00
Interest rate 4.000%
A. .
18-25 7
Fv $8,346.96
B.
18-65 47
Fv $ 40,073.90
C. $ 3,131.08
Problem 4-11
Receive for next three years $ 200.00
Interest rate 9.0000%
A.
PV
PV $506.25893
B.
FV $655.6200
C.
Interest rate 9.000%
1 year 200.00
2 year 418.000
3 year 655.620
Final balance compare to B equal to
Problem 4-12
one year $ 44,231.00
following year $ 88,462.00
three years from today $ 132,693.00
Interest rate 10.9000%
A.
PV $209,097.6411
B.
FV $285,196.2245
Problem 4-13
Rate 5.74%
NPER 6
PMT 8000
PV $39,662.01
FV $55,438.38
Problem 4-14
Invest today $ 20,000.00
will receive $ 1,000.00
two years from now $ 3,000.00
ten years from now $ 20,000.00
A. interest rate 12%
$ (10,276.096)
B. Interest rate 8.000%
$ (7,238.1879)
Problem 4-15
it will pay end of the next three years $ 36,000.00
Initial ivestment $ 9,000.00
aditional investment In second year $ 45,000.00
Interest rate 6.0000%
NPV $ 47,178.59
Problem 4-16
One year $ 300.00
Build $ 3,000.00
Interest rate 9.0000%
PV0=C/r $ 3,333.33
NPV= PV beneifts - PV costs $ 333.33
Problem 4-17
one year To manufacture $ 700.00
cost to build $ 8,425.00
interest rate 8.00%
PV0=C/r $ 8,750.00
NPV= PV beneifts - PV costs $ 325.00
B.
PV=(1/(1+r))*(C/r) $ 8,101.85
NPV= PV beneifts - PV costs $ (323.15)
Problem 4-18
Bond outstanding paying per year $ 200.00
interest rate 4.00%
A.
Value of bond immediately after a $ 5,000.00
payment is made PV0=C/r
B.
Value of the bond immediately before a $ 5,200.00
payment is made
Problem 4-19
PMT 6000
Next 73
Interest rate 6.00%
Present value $98,578.75
Problem 4-20
Every 5 years $ 900,000.00
the first payment will occur 5years from today
Interest rate 11.20%
PV0=C/r $1,285,175.1307
Problem 4-21
Every 5 years $ 17,912.00
yearly cash paid 35
Interest rate 4.40%
PV of 4 years $316,897.68
PV of today $266,757.76
Problem 4-22
22 years old plan to save end od each month $ 5,000.00
last deposit at age of 66
savings 4%
FV $577,064.38
FV $296,641.68
Problem 4-23
Putting on every birthday since 1^st 2000
account pays an interest rate 3%
PMT 18
Money on 18th Birthday $46,828.87
Problem 4-24
First payment occur $ 2,000.00
Interest rate 10.00%
Growth rate 5.00%
PV $ 40,000.00
immediately after first payment PV0=C*(1+g)/(r-g) $ 42,000.00
Problem 4-25
Building new machine and save $ 3,000.00
saving decline rate 1.00%
Interest rate 7.00%
PV $ 37,500.000000
Problem 4-26
will last years 17
drug's profit $ 3,000,000.00
Interest rate 7.00%
Growth rate 2.00%
PV
$ 33,403,165.57
Problem 4-27
Tution fees per year $ 20,000.00
Years 13
Interest rate 3.00%
Growth year 3.00%
SO, AS R=G
C*N $ 260,000.00
Problem 4-28
Promised one year from today $ 1,000.00
Interest rate 7.00%
growth rate 7.00%
years 30
SO, AS R=G
PV 28037.3831775701
Problem 4-29
earning announced earning of $ 2,000,000.00
Interest rate 7.00%
years 5
growth rate will grow 10.00%
earning growth expected to be slow 3.00%
PV ga Enter
the value at date 5
PV5 PV=C/(r-g)
$ 82,941,265.00
SO, THE VALUE TODAY IS
PV gp
PV5/(1+r)^5
$ 59,135,975.65
PV ga + PV gp $ 70,009,209.59
Problem 4-30
offered to give you $ 195.00
after that growing at 3.30%
years 20
interest rate 6.40%
A. Enter
B.
Problem 4-31
You put in the bank $ 100.00
you account earns interest every month 0.69%
A. $ 108.60
B. R= (FV/PV)-1 8.601567%
Problem 4-32
deposit $ 869.00
earing per month compounded montly 0.75%
first deposit will be one month from now
your last deposit will be years from now 10
the amount in your account after my last deposit $168,163.90679
Problem 4-33
bond makes one payment at the end of every year
interest rate 6.0000%
you initially put $ 3,000.00
end of the year payment $ 180.0000000
Problem 4-34
payments 23
ammount borrrowed $ 350,000.00
first payment will be in one year
B.
Interest rate 4.20%
$24,027.00
C. 7.20%
interest rate $31,582.05094
D. $7,555.04970
31.444%
Problem 4-35
piece of art costs $ 30,000.00
total payments 12
nominal annual interest rate 5%
payments into 2 years 10.3%
PMT $4,456.96040
Problem 4-36
will save in RRSP $ 2,000,000.00
by the time 65
today is my 34
interest rate is 6%
PMT $22,004.67
Ptoblem 4-37
need to save in RRSP 3,000,000
by the time 65
today is my 33
if the interest rate 3%
PMT $ 54,468.00
let the amount that you set aside grow by 5%
so, the first payment is
FVn
$ 3,000,000.00
Problem 4-38
years old 31
save each year $ 10,000.00
nper 34
retire at age 65
interest rate 10%
FV at age 65 $2,454,766.99
Until age of 95
age 66
66 1
67 2
68 3
69 4
70 5
71 6
72 7
73 8
74 9
75 10
76 11
77 12
78 13
79 14
80 15
81 16
82 17
83 18
84 19
85 20
86 21
87 22
88 23
89 24
90 25
PMT $260,399.84
Problem 4-39
turned years 30
interest 7%
you cannot make withdrawals 60
plan to live to 100
withdraw $ 92,000.00
PV of 65 $1,226,517.21
pv of 30 the value of the annuity $161,124.03
the annual deposit $12,085.77
Problem 4-40
turned years 30
work until 65
plan to live 100
starting salary $ 77,000.00
grow rate 1.90%
interest rate 7.30%
withdraw 102,000
$1,278,605.00
FVn
$1,278,605.00
fraction of salary 9.1095%
Problem 4-41
suppose you invest $ 2,000.00
receive in five years 10,750
years
0
1
2
3
4
5
Interest rate
B. years
0
1
2
3
4
5
Interest rate
Nper 5
PMT $982.44
Problem 4-42
years
0
1
2
3
4
IRR
Problem 4-43
As perpetuity PV=C/r
C= 400
PV= $ 4,000.00
R=C/PV 10.0000%
Problem 4-44
2 MONTHS
9 MONTHS
15 MONTHS
2 YEARS
IF HE SELL THE CHEESE IMEDIATELY 7.5
IF HE AGES THE CHEESE MUST GIVE UP THE TODAY 7.5
PROBLEM 4-45
BOUGHT 406932
IN EXCHANGE FOR THE 406932 MANULIFE WILL OPAY HER 35000
INTEREST RATE 5%
PROBLEM 4-46
GENERATE REVENUES 1,220,000
MAINTAINENACE COSTS WILL START 69540
G 5%
R 6%
PV OF REVENUES
CHAPTER -5
PROBLEM 5-1
INTEREST RATE 20%
TWO-YEAR DEPOSIT 2
A. SIX MONTHS 4.6635%
B. ONE YEAR 9.54451%
C. ONE MONTH 0.76257%
PROBLEM 5-2
BANK ACCOUNT PAYS 10%
YEARS 3
A
an account pays 5% every six months for three years 5%
deposit 1
years 3
$1.3310000
$1.340096
B.
instructor based question
cash flows
cashflows
year
interest rate
$13,310.00
$17,715.61
$17,280.00
$7,495.16
$1,892.39
$10,655.66
10
$73,669.59
PV
1 $120.69
5 $119.03
10 $72.54
After 34
FV value
$5,800.8202
$2,432.0000
9
5%
2000
900
2900
3102.65643195703
1102.65643195703
202.656431957032
9
10
11
$54,708.59 12
13
14
15
16
Years 5 17
18
PV= C/(1+r)^n
FVn=C*(1+r)^n
3 ∑24_(𝑛=0)^𝑛▒𝑃𝑉 〖 (𝐶 〗 _𝑛) =∑24_(𝑛=0)^𝑛 □(64&𝐶𝑛/(
$655.62
FVn=PV*(1+r)^n
YEARS pv
3 0 1
cost $ (9,000.00)
benefit $ 36,000.00
cash flow $ (9,000.00) $ 36,000.00
$ 47,178.59
NPV =
Benefit-cost
70.029% Interest rate =((1+i)^n)-1
=PV(B237,B236,-B235)
PV=C/(r-g)
R=G PV=N X C1/(1+r)
$ 1.10
$ 1.03
1
C1 r g n
2000000.00 7.0000% 10.0000% 5
$59,135,975.65
3.30% $ 1.0330
6.40%
C1 r g n
195.00 6.4000% 3.3000% 20
YEAR PAYOUT REMAINING BALANCE
0 0 $2,808.17808
1 $ 195.00 $2,792.90148
2 $ 201.44 $2,770.21218 .
3 $ 208.08 $2,739.42340
4 $ 214.95 $2,699.79743
5 222.04239211 $2,650.54207
6 229.36979105 $2,590.80697
7 236.93899416 $2,519.67962
8 244.75798097 $2,436.18114
9 252.83499434 $2,339.26174
10 261.17854915 $2,227.79594
11 269.79744127 $2,100.57744
12 278.70075684 $1,956.31364
13 287.89788181 $1,793.61983
14 297.39851191 $1,611.01298
15 307.2126628 $1,406.90515
16 317.35068068 $1,179.59640
17 327.82325314 $927.26732
18 338.64142049 $647.97101
19 349.81658737 $339.62456
20 361.36053475 $0.00000
21 373.2854324
1 year = 12 months
120
PV regular perpetuity
32
33
r g n
Solves for …
3.000% 5.000% 33
30
NPER30 30
NPER65 40
work
NPER30 35
NPER 65 35
r g n
Solves for …
7.300% 1.900% 35
Cash flows
$ (2,000.00)
0
0
0
0
10,750
39.983%
cash flows
$ (2,000.00)
39.983%
cash flows
46,800
-13,000
-13,000
-13,000
-13,000
4.3518%
7.5
9.5
11.5
12.5
24
(EAR)
6
$ 25,579.00
30
5.10%
4_(𝑛=0)^𝑛 □(64&𝐶𝑛/((1+𝑟)^𝑛))
2 3
$ (45,000.00)
$ 36,000.00 $ 36,000.00
-9000 $ 36,000.00
Solves for … PV0
$ 10,873,233.9408
PV0
Solves for …
$2,808.18
34 1
35 2
36 3
37 4
38 5
39 6
40 7
41 8
42 9
43 10
44 11
45 12
46 13
47 14
48 15
49 16
50 17
51 18
52 19
53 20
C1 54 21
25522.65 55 22
56 23
57 24
58 25
59 26
60 27
61 28
62 29
63 30
64 31
65 32
C1
7014.31
r g n Solves for … PV0
7.0000% 2.0000% 17 $ -
$2,648.18 $2,810.88
$5,703.41
$5,703.41
c1 190
g 2.90%
n 20
r 6.50%
Enter C1 r g n Solves for …
190.00 6.5000% 2.9000% 20
$ 2,761.38
202.35 $ 2,559.03
178.403756
$ 2,446.20
PV0
$ 2,624.60
