Week10(AppE)
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Transcript of Week10(AppE)
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BRIEF EXERCISE E-5 FV = p X FV of 1 factor + (p X FV of an annuity factor) = ($5,000 X 2.40662) + ($1,000 X 28.13238) = $12,033.10 + $28,132.38 = $40,165.48
BRIEF EXERCISE E-17
i = 9% ? $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200 $3,200
0 1 2 3 4 5 6 7 8 Discount rate from Table 4 is 5.53482. Present value of 8 payments of $3,200 each discounted at 9% is therefore $17,711.42 ($3,200 X 5.53482). Mark Barton should not purchase the tire retreading machine because the present value of the future cash flows is less than the $18,000 purchase price of the retreading machine.
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BRIEF EXERCISE E-27 (a) Inputs: 7 6.9 ? 16,000 0
N
I
PV
PMT
FV Answer: 86,530.07 (b) Inputs: 10 8.65 ? 14,000** 200,000*
N
I
PV
PMT
FV Answer: 178,491.52
*200 X $1,000 **$200,000 X .07
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BRIEF EXERCISE E-28
(a) Noteset payments at 12 per year. Inputs: 96 7.8 42,000 ? 0 N I PV PMT FV Answer: 589.48 (b) Noteset payments to 1 per year. Inputs: 5 7.25 8,000 ? 0 N I PV PMT FV Answer: 1,964.20