Factors: How Time and Interest Affect Money

Chapter 2

Factors: How Time and Interest Affect Money

Solutions to Problems

2.1      1. (F/P,8%25) = 6.8485;  2. (P/A,3%,8) = 7.0197; 3. (P/G,9%,20) = 61.7770;

           4. (F/A,15%,18) = 75.8364; 5. (A/P,30%,15) = 0.30598

1.   P = 140,000(F/P,7%,4)

              =140,000(1.3108)

              = $183,512

1.   F = 200,000(F/P,10%,3)

              = 200,000(1.3310)

              = $266,200

1.   P = 600,000(P/F,12%,4)

              = 600,000(0.6355)

              = $381,300

1.  (a) A = 225,000(A/P,15%,4)

                   = 225,000(0.35027)

                   = $78,811

          (b) Recall amount = 78,811/0.10

                                       = $788,110 per year

1. F = 150,000(F/P,18%,7)

            = 150,000(3.1855)

            = $477,825

1. P = 75(P/F,18%,2)

            = 75(0.7182)

            = $53.865 million

1. P = 100,000((P/F,12%,2)

            = 100,000(0.7972)

            = $79,720

1. F = 1,700,000(F/P,18%,1)

            = 1,700,000(1.18)

            = $2,006,000

1. P = 162,000(P/F,12%,6)

            = 162,000(0.5066)        

            = $82,069

1. P = 125,000(P/F,14%,5)

            = 125,000(0.5149)

            = $ 64,925

1. P = 9000(P/F,10%,2) + 8000(P/F,10%,3) + 5000(P/F,10%,5)

            = 9000(0.8264) + 8000(0.7513) + 5000(0.6209)

            = $16,553

1. P = 1,250,000(0.10)(P/F,8%,2) + 500,000(0.10)(P/F,8%,5)

            = 125,000(0.8573) + 50,000(0.6806)

            = $141,193

1. F = 65,000(F/P,4%,5)

            = 65,000(1.2167)

            = $79,086

1. P = 75,000(P/A,20%,3)

            = 75,000(2.1065)

            = $157,988

1. A = 1.8(A/P,12%,6)

             = 1.8(0.24323)

             = $437,814

1. A = 3.4(A/P,20%,8)

             = 3.4(0.26061)

             = $886,074

1. P = (280,000-90,000)(P/A,10%,5)

            = 190,000(3.7908)

            = $720,252

1. P = 75,000(P/A,15%,5)

            = 75,000(3.3522)

            = $251,415

1. F = (458-360)(20,000)(0.90)(F/A,8%,5)

            = 1,764,000(5.8666)

            = $10,348,682

1. P = 200,000((P/A,10%,5)

            = 200,000(3.7908)

            = $758,160

1. P = 2000(P/A,8%,35)

            = 2000(11.6546)

            = $23,309

1. A = 250,000(A/F,9%,3)

             = 250,000(0.30505)

             = $76,263

1. F = (100,000 + 125,000)(F/A,15%,3)

            = 225,000(3.4725)

            = $781,313

1. (a)  1. Interpolate between n = 32 and n = 34:

                   1/2 = x/0.0014

                      x = 0.0007

                   (P/F,18%,33) = 0.0050 – 0.0007

                                         = 0.0043

               2. Interpolate between n = 50 and n = 55:

                    4/5 = x/0.0654

                        x = 0.05232

                   (A/G,12%,54) = 8.1597 + 0.05232

                                           = 8.2120

          (b)  1. (P/F,18%,33) = 1/(1+0.18)33

                                           = 0.0042

                 2. (A/G,12%,54) = {(1/0.12) – 54/[(1+0.12)54 –1}

                                             = 8.2143

2.26   (a)     1.   Interpolate between i = 18% and i = 20% at n = 20:

                        1/2 = x/40.06

                           x = 20.03

                        (F/A,19%,20) =  146.6280 + 20.03

                                               =166.658

1.  Interpolate between i = 25% and i = 30% at n = 15:

1/5 = x/0.5911

   x = 0.11822

(P/A,26%,15) = 3.8593 – 0.11822

                       = 3.7411

1.   1.  (F/A,19%,20) = [(1 + 0.19)20 – 0.19]/0.19

                                     = 169.6811

1. (P/A,26%,15) = [(1 + 0.26)15 –1]/[0.26(1 + 0.26)15 ]

                             = 3.7261

2.27   (a) G = $200   (b) CF8 = $1600    (c) n = 10

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