This document contains solutions to exercises from a textbook on mathematics of finance. It provides answers to multiple choice and numerical problems related to simple and compound interest, effective rates of interest, present and future value of sums of money, and discounted cash flows. The solutions include calculations of interest earned on principal amounts over time at given rates, as well as determining unknown rates based on future or present values.
The document discusses the role and importance of financial management. It explains that financial management ensures funds are available to achieve organizational objectives like paying bills, wages, and acquiring resources. It also ensures costs are controlled and adequate cash flow and profitability levels are established. Financial management works closely with other departments and maintains important financial records.
This document contains questions and exercises related to capital investment decisions and project evaluation techniques. It discusses key concepts such as:
- Independent vs. mutually exclusive projects
- The importance of considering the timing and amount of cash flows when evaluating projects
- How ignoring the time value of money can lead to rejecting good projects or accepting bad ones
- Common project evaluation metrics like payback period, accounting rate of return, net present value, and internal rate of return
- The importance of using an appropriate discount rate that reflects a project's risk when calculating net present value or comparing internal rate of return
It then provides sample calculations and problems applying these concepts to evaluate hypothetical capital investment projects and determine which projects to accept or reject
cost of capital .....ch ...of financial management ..solution by MIAN MOHSIN ...mianmohsinmumtazshb
Β
The document provides solutions to problems from Chapter 11 on the cost of capital.
It calculates the cost of various sources of capital such as debt, preferred stock, and common equity. It also calculates the weighted average cost of capital (WACC) using different capital structure weights.
Key calculations include:
1) Calculating the cost of debt using the yield to maturity method and the approximation method.
2) Calculating the cost of preferred stock as the dividend yield.
3) Calculating the cost of common equity using the capital asset pricing model.
4) Calculating the WACC using both book value and market value weights for the capital structure.
5) Exploring how
This document contains solutions to problems related to risk and return from Chapter 5. Problem P5-1 calculates rates of return for two investments. Investment X has a higher rate of return of 12.5% compared to 12.36% for Investment Y. Problem P5-1 concludes that Investment X should be selected. Problem P5-9 assesses the return and risk of two projects, Project 257 and Project 432, by calculating their expected returns, standard deviations, ranges, and coefficients of variation to determine which project has lower risk.
To achieve an information system strategy for the company, the company must make a business investment. the way companies do to estimate how much
the amount of the investment in providing benefits to the company, the company determines the NPV first.
The document discusses the business and financial environments that financial managers operate within. It covers four basic forms of business organization: sole proprietorships, partnerships, corporations, and limited liability companies. It then discusses risk management, including defining risk, types of risk, and the three steps of risk management: identification, assessment, and treatment. Finally, it outlines the financial environment and key components like financial markets, intermediaries, and brokers.
This document discusses cost concepts relevant to decision making. It covers classifying costs as either product costs, period costs, variable costs or fixed costs. It then provides examples of costs that fall into each of these categories. The document also contains examples of using cost-volume-profit analysis to determine break-even points, unit costs at different production volumes, and the sales volume needed to reach the break-even point. Graphs and calculations are presented to illustrate cost-volume-profit relationships.
The document discusses the role and importance of financial management. It explains that financial management ensures funds are available to achieve organizational objectives like paying bills, wages, and acquiring resources. It also ensures costs are controlled and adequate cash flow and profitability levels are established. Financial management works closely with other departments and maintains important financial records.
This document contains questions and exercises related to capital investment decisions and project evaluation techniques. It discusses key concepts such as:
- Independent vs. mutually exclusive projects
- The importance of considering the timing and amount of cash flows when evaluating projects
- How ignoring the time value of money can lead to rejecting good projects or accepting bad ones
- Common project evaluation metrics like payback period, accounting rate of return, net present value, and internal rate of return
- The importance of using an appropriate discount rate that reflects a project's risk when calculating net present value or comparing internal rate of return
It then provides sample calculations and problems applying these concepts to evaluate hypothetical capital investment projects and determine which projects to accept or reject
cost of capital .....ch ...of financial management ..solution by MIAN MOHSIN ...mianmohsinmumtazshb
Β
The document provides solutions to problems from Chapter 11 on the cost of capital.
It calculates the cost of various sources of capital such as debt, preferred stock, and common equity. It also calculates the weighted average cost of capital (WACC) using different capital structure weights.
Key calculations include:
1) Calculating the cost of debt using the yield to maturity method and the approximation method.
2) Calculating the cost of preferred stock as the dividend yield.
3) Calculating the cost of common equity using the capital asset pricing model.
4) Calculating the WACC using both book value and market value weights for the capital structure.
5) Exploring how
This document contains solutions to problems related to risk and return from Chapter 5. Problem P5-1 calculates rates of return for two investments. Investment X has a higher rate of return of 12.5% compared to 12.36% for Investment Y. Problem P5-1 concludes that Investment X should be selected. Problem P5-9 assesses the return and risk of two projects, Project 257 and Project 432, by calculating their expected returns, standard deviations, ranges, and coefficients of variation to determine which project has lower risk.
To achieve an information system strategy for the company, the company must make a business investment. the way companies do to estimate how much
the amount of the investment in providing benefits to the company, the company determines the NPV first.
The document discusses the business and financial environments that financial managers operate within. It covers four basic forms of business organization: sole proprietorships, partnerships, corporations, and limited liability companies. It then discusses risk management, including defining risk, types of risk, and the three steps of risk management: identification, assessment, and treatment. Finally, it outlines the financial environment and key components like financial markets, intermediaries, and brokers.
This document discusses cost concepts relevant to decision making. It covers classifying costs as either product costs, period costs, variable costs or fixed costs. It then provides examples of costs that fall into each of these categories. The document also contains examples of using cost-volume-profit analysis to determine break-even points, unit costs at different production volumes, and the sales volume needed to reach the break-even point. Graphs and calculations are presented to illustrate cost-volume-profit relationships.
This document contains a Halloween-themed math worksheet for students with multiplication, division, and addition problems. It includes word problems involving multiplying or adding numbers of ghosts, bats, or other Halloween items. The worksheet is accompanied by answer keys showing the step-by-step work for each problem. Additional Halloween-themed math activities and games are recommended from the same creator.
The document discusses risk and return in investing. It explains that equity investments like stocks historically have higher average returns of over 10% compared to debt investments like bonds that return 3-4%, but stocks are also more volatile. It defines risk as the variability of returns, and introduces the concepts of systematic risk that affects all stocks equally and unsystematic risk that is specific to individual stocks. Diversification can reduce unsystematic risk but not systematic risk. It also discusses measuring market risk through a stock's beta value, which represents its volatility relative to the overall market.
The accounting equation shows that a business's economic resources must equal the claims against those resources. Economic resources, also called assets, are items owned that provide future economic benefits. Assets equal liabilities plus equity. Liabilities are obligations to pay others, while equity is the owners' residual claim after deducting liabilities from assets. Expenditures must be classified as capital or revenue for the accounting periods to properly match expenses with revenues and show accurate asset values and financial results in accordance with accounting principles.
This document provides information on exponential growth and decay formulas. It gives the basic formulas for growth as y=ab^x where a is the starting amount, b is the growth factor which is 1 plus the rate, and x is the number of periods. It provides examples of using the growth formula to calculate population increases over time given a starting population and growth rate. It also covers the decay formula and examples of its use. It discusses the differences between simple and compound interest calculations.
This document discusses marginal analysis in business and economics. It provides an example problem involving the demand and cost functions of producing computer sets. It asks to: (1) Express price as a function of demand, (2) Find marginal cost, (3) Find revenue function and its domain, (4) Find marginal revenue, (5) Interpret marginal revenue at two production levels, (6) Graph cost and revenue and find break-even points, (7) Find profit function, (8) Find marginal profit, and (9) Interpret marginal profit at two production levels. The solutions provide mathematical derivations and economic interpretations.
Problem 6-2A manager wants to assign tasks to workstations as .docxsleeperharwell
Β
Problem 6-2
A manager wants to assign tasks to workstations as efficiently as possible, and achieve an hourly output of 331/3 units. Assume the shop works a 60-minute hour. Assign the tasks shown in the accompanying precedence diagram (times are in minutes) to workstations using the following rules:
a.
In order of most following tasks. Tiebreaker: greatest positional weight.
Work Station
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β TasksΒ Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β
I
II
III
IV
b.
In order of greatest positional weight.
Work Station
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Tasks Β Β Β Β Β Β Β Β Β Β Β Β Β Β
I
II
III
IV
c.
What is the efficiency? (Round your answer to 2 decimal places. Omit the "%" sign in your response. )
Β Β Efficiency
% Β
Problem 6-3
A manager wants to assign tasks to workstations as efficiently as possible, and achieve an hourly output of 4 units. The department uses a working time of 56 minutes per hour. Assign the tasks shown in the accompanying precedence diagram (times are in minutes) to workstations using the following rules:
a.
In order of most following tasks. Tiebreaker: greatest positional weight.
Work Station
Β Β Tasks
I
II
III
IV
b.
In order of greatest positional weight.
Work Station
Tasks
I
II
III
IV
c.
What is the efficiency? (Round your answer to 2 decimal places. Omit the "%" sign in your response. )
Β Β Efficiency
Β % Β
Problem 6-8
A shop works a 400-minute day. The manager of the shop wants an output of 200 units per day for the assembly line that has the elemental tasks shown in the table. Do the following:
Task
Immediate
Predecessor
Task Time (minutes)
a
-
0.5
b
a
1.4
c
a
1.2
d
a
0.7
e
b, c
0.5
f
d
1.0
g
e
0.4
h
g
0.3
i
f
0.5
j
e, i
0.8
k
h, j
0.9
m
k
0.3
b.
Assign tasks according to the most following tasks rule.
Work Station
Β Β Β Β Β Β Β Β Β Β Β Β Following Tasks
1
2
3
4
5
c.
Assign tasks according to the greatest positional weight rule.
Work Station
Β Β Β Β Β Β Β Β Β Β Β Β Following Tasks
I
II
III
IV
V
d.
Compute the balance delay for each rule. Which one yields the better set of assignments in this instance? (Omit the "%" sign in your response.)
Β Β Balance delay: both part b and c are
Β % Β
Problem 6-18
For the set of tasks given below, do the following:
Task
Task Time
(seconds)
Immediate
Predecessor
A
45
-
B
11
A
C
9
B
D
50
-
E
26
D
F
11
E
G
12
C
H
10
C
I
9
F, G, H
J
10
I
193
Assign tasks to stations for a desired output of 500 units in a 7-hour day to balance the line using the longest operation time heuristic. Break ties with the most following tasks heuristic. Calculate the percentage idle time for the line. Use the actual bottleneck cycle time in your calculation.Β (Round your percentage ofΒ idle time to 2 decimal places. Omit the "%" sign in your response.)
Work Station
Task
I
II
III
IV
Β Β Percentage ofΒ idle time
% Β
Problem 7-1
An analyst has timed a metal-cutting operation for 50 cycles. The average time per cycle was 10.9 minutes, and the standard deviation was 1.20 minutes for a worker with a performance rating of 139 percen.
This document provides a summary of Roni Bhowmik's presentation on input-output analysis. The presentation was given on November 17, 2013 at the University of Chinese Academy of Sciences. It discusses the key concepts of input-output analysis developed by Wassily Leontief, including how input-output tables can be used to model interrelationships between sectors in an economy and estimate multiplier effects. The presentation also provides an example of an input-output table and calculations for direct requirements, total requirements, and type I, II and III multipliers.
Here are the steps to solve this problem:
FV = PV(1 + r/n)nt
FV = $4,000(1 + 0.09)11
FV = $4,000(2.1435)
FV = $8,574
The future value of $4,000 invested for 11 years at 9% compounded annually is $8,574.
This document discusses lessons learned from capital market history. It finds that risky assets have historically earned a higher average return, known as a risk premium, compared to risk-free assets like Treasury bills. It also shows that higher risk investments have greater variability of returns, with potential for both higher gains and losses. The document contrasts arithmetic and geometric averages, noting geometric averages better account for compounding effects. Finally, it introduces the concept of market efficiency, where security prices quickly reflect all available public information.
This is the third presentation for the University of New England Graduate School of Business unit GSB711 - Managerial Finance. It explores the time value of money, using examples to help students clarify this concept.
The document introduces differentiation and the concept of the derivative. It discusses how the derivative can be used to find the rate of change of a function and the slope of its tangent line. The main rules covered are:
1) If f(x) = x^n, then the derivative is f'(x) = nx^(n-1).
2) Examples are provided of finding the derivative of functions like f(x) = 6x^3, which is f'(x) = 18x^2.
3) The derivative can be used to find the slope of a tangent line at specific points, like finding the derivative of f(x) = (x + 5)^2 at x
The slide is about evaluation of investment in projects before starting the project. Useful for Finance Manager, Finance Students, Entrepreneurs and Project Managers
An adjusting entry involves both an income statement account (revenue or expense) and a balance sheet account (asset or liability) to record unrecognized income or expenses for the period. There are two categories of adjusting entries: deferrals and accruals. Deferrals involve prepaid expenses, unearned revenue, and similar items. Accruals involve accrued expenses and accrued revenue. Important rules are that cash is never involved in adjusting entries and adjusting entries always involve a revenue or expense account.
This document provides examples and explanations for conducting benefit-cost analysis to evaluate engineering projects and alternatives. It defines the key steps and techniques in benefit-cost analysis including identifying project benefits and costs, quantifying them, discounting cash flows, and calculating the benefit-cost ratio. Examples are provided to demonstrate computing benefit-cost ratios, incremental analysis, and selecting the alternative with the highest ratio or most desirable increment above 1 to indicate project acceptance.
There are four main theories of industrial location:
1) Weber's (1909) least cost theory, which states that industries locate where transportation costs of raw materials and finished products are minimized. This depends on whether the industry is weight gaining or weight losing.
2) Hotelling's (1929) theory of locational interdependence, which examines how demand impacts location as competitors try to capture market share in their locations.
3) Losch's (1939) theory of demand-oriented location, which focused on maximizing access to markets for finished goods.
4) Smith and Pred's (1971) profit-maximization theory examining how firms locate based on profit considerations.
Fundamentals of Engineering Economics 4th Edition Park Solutions ManualChiquitaDurham
Β
1) The document discusses various money management concepts including nominal interest rates, effective annual interest rates, compound interest rates, present value, and future value.
2) Formulas are provided to calculate interest rates, future values, and present values under different compounding periods including monthly, quarterly, annually and more.
3) Worked examples demonstrate how to use the formulas to solve various financial problems such as calculating interest earned on an investment over time, determining periodic payment amounts, and finding equivalent cash flows.
1) The document contains calculations related to interest rates, compounding periods, and time value of money. Various interest rates, discount rates, and yields are computed.
2) Quadratic and logarithmic equations are set up and solved to relate future and present values under different interest rates and time periods.
3) Formulas are provided and derived for simple and compound interest, continuous compounding, and calculating time periods between dates.
The Value of Money - problems and solutionsHassan Samoon
Β
The document discusses the time value of money concepts. It provides explanations and examples of simple and compound interest, present and future value calculations, and annuities. It also includes sample problems and solutions demonstrating time value of money applications. Key concepts covered are interest rates, compounding periods, present and future value formulas, and using tables to determine interest factors for calculations.
This document contains a Halloween-themed math worksheet for students with multiplication, division, and addition problems. It includes word problems involving multiplying or adding numbers of ghosts, bats, or other Halloween items. The worksheet is accompanied by answer keys showing the step-by-step work for each problem. Additional Halloween-themed math activities and games are recommended from the same creator.
The document discusses risk and return in investing. It explains that equity investments like stocks historically have higher average returns of over 10% compared to debt investments like bonds that return 3-4%, but stocks are also more volatile. It defines risk as the variability of returns, and introduces the concepts of systematic risk that affects all stocks equally and unsystematic risk that is specific to individual stocks. Diversification can reduce unsystematic risk but not systematic risk. It also discusses measuring market risk through a stock's beta value, which represents its volatility relative to the overall market.
The accounting equation shows that a business's economic resources must equal the claims against those resources. Economic resources, also called assets, are items owned that provide future economic benefits. Assets equal liabilities plus equity. Liabilities are obligations to pay others, while equity is the owners' residual claim after deducting liabilities from assets. Expenditures must be classified as capital or revenue for the accounting periods to properly match expenses with revenues and show accurate asset values and financial results in accordance with accounting principles.
This document provides information on exponential growth and decay formulas. It gives the basic formulas for growth as y=ab^x where a is the starting amount, b is the growth factor which is 1 plus the rate, and x is the number of periods. It provides examples of using the growth formula to calculate population increases over time given a starting population and growth rate. It also covers the decay formula and examples of its use. It discusses the differences between simple and compound interest calculations.
This document discusses marginal analysis in business and economics. It provides an example problem involving the demand and cost functions of producing computer sets. It asks to: (1) Express price as a function of demand, (2) Find marginal cost, (3) Find revenue function and its domain, (4) Find marginal revenue, (5) Interpret marginal revenue at two production levels, (6) Graph cost and revenue and find break-even points, (7) Find profit function, (8) Find marginal profit, and (9) Interpret marginal profit at two production levels. The solutions provide mathematical derivations and economic interpretations.
Problem 6-2A manager wants to assign tasks to workstations as .docxsleeperharwell
Β
Problem 6-2
A manager wants to assign tasks to workstations as efficiently as possible, and achieve an hourly output of 331/3 units. Assume the shop works a 60-minute hour. Assign the tasks shown in the accompanying precedence diagram (times are in minutes) to workstations using the following rules:
a.
In order of most following tasks. Tiebreaker: greatest positional weight.
Work Station
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β TasksΒ Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β
I
II
III
IV
b.
In order of greatest positional weight.
Work Station
Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Β Tasks Β Β Β Β Β Β Β Β Β Β Β Β Β Β
I
II
III
IV
c.
What is the efficiency? (Round your answer to 2 decimal places. Omit the "%" sign in your response. )
Β Β Efficiency
% Β
Problem 6-3
A manager wants to assign tasks to workstations as efficiently as possible, and achieve an hourly output of 4 units. The department uses a working time of 56 minutes per hour. Assign the tasks shown in the accompanying precedence diagram (times are in minutes) to workstations using the following rules:
a.
In order of most following tasks. Tiebreaker: greatest positional weight.
Work Station
Β Β Tasks
I
II
III
IV
b.
In order of greatest positional weight.
Work Station
Tasks
I
II
III
IV
c.
What is the efficiency? (Round your answer to 2 decimal places. Omit the "%" sign in your response. )
Β Β Efficiency
Β % Β
Problem 6-8
A shop works a 400-minute day. The manager of the shop wants an output of 200 units per day for the assembly line that has the elemental tasks shown in the table. Do the following:
Task
Immediate
Predecessor
Task Time (minutes)
a
-
0.5
b
a
1.4
c
a
1.2
d
a
0.7
e
b, c
0.5
f
d
1.0
g
e
0.4
h
g
0.3
i
f
0.5
j
e, i
0.8
k
h, j
0.9
m
k
0.3
b.
Assign tasks according to the most following tasks rule.
Work Station
Β Β Β Β Β Β Β Β Β Β Β Β Following Tasks
1
2
3
4
5
c.
Assign tasks according to the greatest positional weight rule.
Work Station
Β Β Β Β Β Β Β Β Β Β Β Β Following Tasks
I
II
III
IV
V
d.
Compute the balance delay for each rule. Which one yields the better set of assignments in this instance? (Omit the "%" sign in your response.)
Β Β Balance delay: both part b and c are
Β % Β
Problem 6-18
For the set of tasks given below, do the following:
Task
Task Time
(seconds)
Immediate
Predecessor
A
45
-
B
11
A
C
9
B
D
50
-
E
26
D
F
11
E
G
12
C
H
10
C
I
9
F, G, H
J
10
I
193
Assign tasks to stations for a desired output of 500 units in a 7-hour day to balance the line using the longest operation time heuristic. Break ties with the most following tasks heuristic. Calculate the percentage idle time for the line. Use the actual bottleneck cycle time in your calculation.Β (Round your percentage ofΒ idle time to 2 decimal places. Omit the "%" sign in your response.)
Work Station
Task
I
II
III
IV
Β Β Percentage ofΒ idle time
% Β
Problem 7-1
An analyst has timed a metal-cutting operation for 50 cycles. The average time per cycle was 10.9 minutes, and the standard deviation was 1.20 minutes for a worker with a performance rating of 139 percen.
This document provides a summary of Roni Bhowmik's presentation on input-output analysis. The presentation was given on November 17, 2013 at the University of Chinese Academy of Sciences. It discusses the key concepts of input-output analysis developed by Wassily Leontief, including how input-output tables can be used to model interrelationships between sectors in an economy and estimate multiplier effects. The presentation also provides an example of an input-output table and calculations for direct requirements, total requirements, and type I, II and III multipliers.
Here are the steps to solve this problem:
FV = PV(1 + r/n)nt
FV = $4,000(1 + 0.09)11
FV = $4,000(2.1435)
FV = $8,574
The future value of $4,000 invested for 11 years at 9% compounded annually is $8,574.
This document discusses lessons learned from capital market history. It finds that risky assets have historically earned a higher average return, known as a risk premium, compared to risk-free assets like Treasury bills. It also shows that higher risk investments have greater variability of returns, with potential for both higher gains and losses. The document contrasts arithmetic and geometric averages, noting geometric averages better account for compounding effects. Finally, it introduces the concept of market efficiency, where security prices quickly reflect all available public information.
This is the third presentation for the University of New England Graduate School of Business unit GSB711 - Managerial Finance. It explores the time value of money, using examples to help students clarify this concept.
The document introduces differentiation and the concept of the derivative. It discusses how the derivative can be used to find the rate of change of a function and the slope of its tangent line. The main rules covered are:
1) If f(x) = x^n, then the derivative is f'(x) = nx^(n-1).
2) Examples are provided of finding the derivative of functions like f(x) = 6x^3, which is f'(x) = 18x^2.
3) The derivative can be used to find the slope of a tangent line at specific points, like finding the derivative of f(x) = (x + 5)^2 at x
The slide is about evaluation of investment in projects before starting the project. Useful for Finance Manager, Finance Students, Entrepreneurs and Project Managers
An adjusting entry involves both an income statement account (revenue or expense) and a balance sheet account (asset or liability) to record unrecognized income or expenses for the period. There are two categories of adjusting entries: deferrals and accruals. Deferrals involve prepaid expenses, unearned revenue, and similar items. Accruals involve accrued expenses and accrued revenue. Important rules are that cash is never involved in adjusting entries and adjusting entries always involve a revenue or expense account.
This document provides examples and explanations for conducting benefit-cost analysis to evaluate engineering projects and alternatives. It defines the key steps and techniques in benefit-cost analysis including identifying project benefits and costs, quantifying them, discounting cash flows, and calculating the benefit-cost ratio. Examples are provided to demonstrate computing benefit-cost ratios, incremental analysis, and selecting the alternative with the highest ratio or most desirable increment above 1 to indicate project acceptance.
There are four main theories of industrial location:
1) Weber's (1909) least cost theory, which states that industries locate where transportation costs of raw materials and finished products are minimized. This depends on whether the industry is weight gaining or weight losing.
2) Hotelling's (1929) theory of locational interdependence, which examines how demand impacts location as competitors try to capture market share in their locations.
3) Losch's (1939) theory of demand-oriented location, which focused on maximizing access to markets for finished goods.
4) Smith and Pred's (1971) profit-maximization theory examining how firms locate based on profit considerations.
Fundamentals of Engineering Economics 4th Edition Park Solutions ManualChiquitaDurham
Β
1) The document discusses various money management concepts including nominal interest rates, effective annual interest rates, compound interest rates, present value, and future value.
2) Formulas are provided to calculate interest rates, future values, and present values under different compounding periods including monthly, quarterly, annually and more.
3) Worked examples demonstrate how to use the formulas to solve various financial problems such as calculating interest earned on an investment over time, determining periodic payment amounts, and finding equivalent cash flows.
1) The document contains calculations related to interest rates, compounding periods, and time value of money. Various interest rates, discount rates, and yields are computed.
2) Quadratic and logarithmic equations are set up and solved to relate future and present values under different interest rates and time periods.
3) Formulas are provided and derived for simple and compound interest, continuous compounding, and calculating time periods between dates.
The Value of Money - problems and solutionsHassan Samoon
Β
The document discusses the time value of money concepts. It provides explanations and examples of simple and compound interest, present and future value calculations, and annuities. It also includes sample problems and solutions demonstrating time value of money applications. Key concepts covered are interest rates, compounding periods, present and future value formulas, and using tables to determine interest factors for calculations.
Chapter 3 the time value of money solutionQudratShahab
Β
The document discusses the time value of money through examples of simple and compound interest calculations. It provides explanations and step-by-step workings for calculating future and present value using interest rates, time periods, and the compound interest, future value, and present value formulas. Sample questions are also included with full solutions showing calculations for topics like interest, annuities, and yield.
This document contains numerical examples related to time value of money calculations. It includes calculations for:
- Present and future value of a single payment
- Present and future value of an annuity
- Net present value
- Internal rate of return
- Multiple internal rates of return
- Reinvestment rate assumptions
The examples demonstrate time value of money principles and calculations for a variety of cash flow patterns over different time periods. Trial and error or spreadsheet tools are suggested to solve the examples.
This document contains solutions to problems from Chapter 2 of a textbook on finance. The problems involve calculating future values, present values, annuities, and growth rates using time value of money formulas for various interest rates and time periods. The solutions provide the numerical calculations and answers for each problem.
This document contains calculations for various financial problems. It includes calculations for:
1) Comparing the total value after 1 and 2 years for deposits in Bank A and Bank B, with Bank B earning more in both cases.
2) Calculating the future value of deposits of $5,000, $8,000, and $12,000 over different time periods with 6% interest.
3) Calculating the present value of an annuity of $20,000 over 4 years with 9% interest, both initially and deferred 2 years.
The document shows the work for several other calculations involving present and future values, annuities, and comparing expected returns and risk of stock and bond
This document contains a tutorial on applied statistics and mathematics in economics and business. It covers various concepts such as mutually exclusive events, probability, distributions, expected value, and variance. Examples include the probability of employees coming from different countries in an accountancy firm, the likelihood of a boy liking different foods, accident rates by age, and train arrival times. Key formulas and calculations are shown for these examples.
This document contains solutions to practice problems about current liabilities management. It addresses topics like cash discounts, credit terms, accounts receivable financing, inventory financing, and the costs associated with different sources of short-term financing like bank loans, commercial paper, and factoring. The problems calculate effective interest rates and costs of various short-term financing options to determine the most cost effective alternative for different scenarios. Ethics considerations around accounts receivable financing are also discussed.
This document provides solutions to end-of-chapter problems from the 8th edition of the textbook "Engineering Economy" by Leland Blank and Anthony Tarquin. It includes solutions to over 50 problems involving time value of money calculations using factors, arithmetic gradients, geometric gradients, and determining interest rates. The solutions demonstrate applications of present worth, future worth, annual worth, payment, and rate of return formulas.
Company 1: In 2013, Coolgardie's return on assets decreased to 15.42% from 23.78% in 2012 due to a drop in profit and increased assets. The net profit margin also decreased from 19.83% to 13.92% as expenses increased more than revenue.
Company 2: In 2010, Billie's Bakery had higher liquidity and profitability ratios compared to 2009. The debt to equity ratio was lower in 2010 at 0.39 compared to 0.41 in 2009.
NSW Ltd and QLD Ltd: In the current year, NSW Ltd had higher returns and shorter days for inventory and debtors compared to QLD Ltd, while their current and liquid
The document shows how to calculate a mortgage payment without a calculator by working through the algebraic formula step-by-step. It provides the formula, inserts known variables for a $100,000 loan at 6% interest over 30 years, converts the interest rate to a decimal, works through solving terms in parentheses and exponents, inserts a new variable, and arrives at a monthly payment of $599.55 through multiplication and division.
This document contains various percentages and calculations with percentages. It includes examples such as:
- 6% of 500 is 30
- 500 + 30 is 530
- 6% + 100% is 106% or 1.06
- 500 multiplied by 1.06 is 530
It also shows calculations with compound interest over time, such as multiplying a starting amount by rates raised to various powers to calculate interest accumulated over different periods of time.
This document provides practice questions and answers related to valuing bonds. Specifically:
- It gives the calculations for determining the present value of various bonds with different coupon rates, payment frequencies, yields, and maturity dates.
- Tables show the effect of changing interest rates on the price of a bond over time.
- Questions ask the reader to calculate bond prices based on yields, determine if the expectations hypothesis holds based on changing forward rates, and compare the attractiveness of bonds with different coupons but the same yields.
- Duration and convexity are calculated for bonds to determine which has the highest risk given a rising yield curve. The relationship between bond prices and yields is examined.
In summary,
Compound interest and related problems in business mathematics Dr. Trilok Kumar Jain
Β
This document provides a lesson on compound interest and related business mathematics concepts. It includes examples of calculating compound interest, simple interest, annuities, sinking funds, and more. Formulas are provided for topics like future value, present value, effective interest rates, and calculating monthly loan payments. Resources are also listed for downloading additional material on entrepreneurship, economics, accounting and related topics.
STUDENTS Andres Hoyos Joy Hwang Alicia Klassanoff L.docxAASTHA76
Β
STUDENTS:
Andres Hoyos Joy Hwang Alicia Klassanoff Ljubomir Petrovic
Bronco Vuskovich Maira Alejandra Soto Alice Benatar
ASSIGNMENT 2
Problem 1:
There are three major business organization forms from start-up to a major corporation. What are
these three business organization forms? What are advantages and disadvantages for each
organization form?
Advantages and Disadvantages of Business Organizations
Easy to
create
Easy to
raise
capital
Taxes
paid once
as
personal
income
Limited
Liability
Unlimited
Life
Easy to
transfer
Ownership
Management
by the
owners
Easy to
make
decisions
Sole
Proprietorship
Partnership
Corporation
100% possible
50% possible
Difficult or impossible
Problem 2:
Based on the chart below, answer the following two questions.
1. If the value of the firm is 10 million, and $F is 12 million, how much will be the payoff to debt
holders and how much will be the payoff to shareholders?
Debt Holders: $ 10 million
Shareholders: $ 0
2. If the value of the firm is 25 million, and $F is 12 million, how much will be the payoff to debt
holders and how much will be the payoff to shareholders?
Debt Holders: $ 12 million
Shareholders: $ 13 million
Problem 3:
Assume that you are nearing graduation and have applied for a job with a local bank. As part of
the bank's evaluation process, you have been asked to take an examination that covers several
financial analysis techniques. The first section of the test addresses discounted cash flow
analysis. See how you would do by answering the following questions.
a. Draw time lines for (1) a $100 lump sum cash flow at the end of Year 2, and (2) an uneven
cash flow stream of -$50, $100, $75, and $50 at the end of Years 0 through 3.
b. What's the future value of an initial $100 after 3 years if it is invested in an account paying
10% annual interest and compounded annually? How about if the interest is compounded
monthly, daily or hourly?
Compounded
Annually
Compounded
Monthly
Compounded Daily Compounded Hourly
Rate π = 0.1 π =
0.1
12
= 0.0083 π =
0.1
365
= 0.00027 π =
0.1
365 Γ 24
= 0.000011
Period π = 3 π = 3 Γ 36 π = 3 Γ 365 = 1095 π = 3 Γ 365 Γ 24 = 26280
ππ½ = π·π½ Γ (π + π)π
πΉπ = 100 Γ (1 + 0.1)3
πΉπ = 100 Γ 0.0083)36
πΉπ = 100 Γ (1 +
0.1
0.00027
)1095
πΉπ = 100 Γ (1 +
0.1
0.000011
)26280
FUTURE
VALUE
$133.10 $134.82 $134.98 $134.99
c. What is the present value of $100 to be received in 3 years if the annual interest rate is
10% and compounded annually? How about if the interest is compounded monthly, daily
or hourly?
Compounded
Annually
Compounded
Monthly
Compounded Daily Compounded Hourly
Rate π = 0.1 π =
0.1
12
= 0.0083 π =
0.1
365
= 0.00027 π =
0.1
365 Γ 24
= 0.000011
Period π = 3 π = 3 Γ 36 π = 3 Γ 365 = 1095 π = 3 Γ 365 Γ 24 = 2
Blank L, Tarquin A (2006) Solucionario Engineering Economy (6th ed).pdfArmandoGarza26
Β
This document provides information about solucionarios, or solutions manuals, for university textbooks and books. It states that the solutions manuals contain step-by-step solutions to all the problems in the textbooks. It invites the reader to download the solucionarios for free from their blogspot website, providing the URL. It also contains some sample pages from economics and engineering economy textbooks, showing examples of solved problems.
This document contains 4 engineering economy problems involving calculations of present and future values, compound interest rates, and cash flows. Problem 1 involves calculating average costs, marginal costs, and break-even points for organizing a class trip. Problem 2 involves calculating unknown cash flows from diagrams with zero present value. Problem 3 involves calculating accumulated balances and withdrawals over time with changing interest rates. Problem 4 involves comparing effective interest rates for banks with different compounding periods and calculating accumulated deposits.
Main Java[All of the Base Concepts}.docxadhitya5119
Β
This is part 1 of my Java Learning Journey. This Contains Custom methods, classes, constructors, packages, multithreading , try- catch block, finally block and more.
Introduction to AI for Nonprofits with Tapp NetworkTechSoup
Β
Dive into the world of AI! Experts Jon Hill and Tareq Monaur will guide you through AI's role in enhancing nonprofit websites and basic marketing strategies, making it easy to understand and apply.
Executive Directors Chat Leveraging AI for Diversity, Equity, and InclusionTechSoup
Β
Letβs explore the intersection of technology and equity in the final session of our DEI series. Discover how AI tools, like ChatGPT, can be used to support and enhance your nonprofit's DEI initiatives. Participants will gain insights into practical AI applications and get tips for leveraging technology to advance their DEI goals.
it describes the bony anatomy including the femoral head , acetabulum, labrum . also discusses the capsule , ligaments . muscle that act on the hip joint and the range of motion are outlined. factors affecting hip joint stability and weight transmission through the joint are summarized.
Physiology and chemistry of skin and pigmentation, hairs, scalp, lips and nail, Cleansing cream, Lotions, Face powders, Face packs, Lipsticks, Bath products, soaps and baby product,
Preparation and standardization of the following : Tonic, Bleaches, Dentifrices and Mouth washes & Tooth Pastes, Cosmetics for Nails.
ISO/IEC 27001, ISO/IEC 42001, and GDPR: Best Practices for Implementation and...PECB
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Denis is a dynamic and results-driven Chief Information Officer (CIO) with a distinguished career spanning information systems analysis and technical project management. With a proven track record of spearheading the design and delivery of cutting-edge Information Management solutions, he has consistently elevated business operations, streamlined reporting functions, and maximized process efficiency.
Certified as an ISO/IEC 27001: Information Security Management Systems (ISMS) Lead Implementer, Data Protection Officer, and Cyber Risks Analyst, Denis brings a heightened focus on data security, privacy, and cyber resilience to every endeavor.
His expertise extends across a diverse spectrum of reporting, database, and web development applications, underpinned by an exceptional grasp of data storage and virtualization technologies. His proficiency in application testing, database administration, and data cleansing ensures seamless execution of complex projects.
What sets Denis apart is his comprehensive understanding of Business and Systems Analysis technologies, honed through involvement in all phases of the Software Development Lifecycle (SDLC). From meticulous requirements gathering to precise analysis, innovative design, rigorous development, thorough testing, and successful implementation, he has consistently delivered exceptional results.
Throughout his career, he has taken on multifaceted roles, from leading technical project management teams to owning solutions that drive operational excellence. His conscientious and proactive approach is unwavering, whether he is working independently or collaboratively within a team. His ability to connect with colleagues on a personal level underscores his commitment to fostering a harmonious and productive workplace environment.
Date: May 29, 2024
Tags: Information Security, ISO/IEC 27001, ISO/IEC 42001, Artificial Intelligence, GDPR
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Find out more about ISO training and certification services
Training: ISO/IEC 27001 Information Security Management System - EN | PECB
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How to Add Chatter in the odoo 17 ERP ModuleCeline George
Β
In Odoo, the chatter is like a chat tool that helps you work together on records. You can leave notes and track things, making it easier to talk with your team and partners. Inside chatter, all communication history, activity, and changes will be displayed.
Strategies for Effective Upskilling is a presentation by Chinwendu Peace in a Your Skill Boost Masterclass organisation by the Excellence Foundation for South Sudan on 08th and 09th June 2024 from 1 PM to 3 PM on each day.
13. Page 2-12
Brown/Kopp 8e ISM (c) 2015 McGraw-Hill Ryerson
7. 500(1.005) = 800(1.005) = 1.6
1.005 = 1.6
= 94.23553231 months
= 7 years, 10 months,8 days
8. 1800(1.02) = 2200
(1.02) =
1.02 = log
= 10.13353897 quarters
= 2 years, 6 months, 12 days
9. (1 + ) = 2
= 2 /
β 1
= 2 / β 1 = 7.18%
10. (1 + ) = 1.5
= (1.5) /
β 1
= 4[(1.5) / β 1] = 10.27%
11. 4.71(1 + ) = 9.38
(1 + ) =
.
.
=
.
.
/
β 1 = 14.77%
12. 4000(1 + ) = 5000(1 + ) = 1.25
= (1.25) / β 1
= 365[(1.25) β 1] = 7.44%
13. a) (1.0456) = 2
log 1.10456 = log2
= 15.54459407 years
= 15 years, 199 days OR 15 years, 6 months, 17 days
Rule of 70
= .
= 15.35087719 years
= 15 years, 129 days OR 15 years, 4 months, 7 days
14. Page 2-13
Brown/Kopp 8e ISM (c) 2015 McGraw-Hill Ryerson
15. 1 +
.
= 1.5
log 1 +
.
= log 1.5
= 2960.098047 days
= 8 years, 41 days OR 8 years, 1 month, 10 days
b) 1 +
.
= 2
log 1 +
.
= log 2
= 3614.614035 days
= 9 years, 330 days OR 9 years, 10 months, 26 days
Rule of 70
=
= .
= 3650 days = 10 years
14. 800 1 +
.
= 1500
(1.049) = 1.875
log(1.049) = log 1.875
= 13.14054666 half β years
= 6 years, 208 days OR 6 years, 6 months,26 days
16. Page 2-15
Brown/Kopp 8e ISM (c) 2015 McGraw-Hill Ryerson
=
5. (1 + β) / = (1 + ) β 1 + β = (1 + ) β β = (1 + ) β 1
6. 800(1.045) = 2(600)(1.035)
.
=
.
=
( / )
( . / . )
= 42.16804634 half -years
= 21 years, 31 days OR 21 years, 1 month, 1 day
7. In years:
1.5[100(1.04) + 25(1.04) ] = 95(1.08)
1.5(1.04) [100 + 25(1.04) ] = 95(1.08) (1.08)
.
=
( . )
. . [ ( . ) ]
.
= 0.476322924.
.
.
.
= 19.65163748 years = 19 years, 238 days
Using simple interest for the last X days we obtain:
1.5(1.04) [100 + 25(1.04) ] 1 + (0.04) = 95(1.08) [1 + (0.08) ]
This solves for X = 233; It takes 19 years and 233 days
8. 500(1.08) + 800(1.08) = 2000
(1.08) [500 + 800(1.08) ] = 2000
1135.065793(1.08) = 2000
(1.08) = 1.762012398
=
.
.
= 7.360302768 years = 7 years, 132 days
Using compound interest for 7 years and simple interest for X days we have
500(1.08) 1 + (0.08) + 800(1.08) 1 + (0.08) = 2000
Solving for X we obtain X β 128 days; It takes 7 years, 128 days
Check : 500(1.08) [1 + (0.08) ] + 800(1.08) [1 + (0.08) ]
= 880.95 + 1118.93 = 1999.88
17. Page 2-16
Brown/Kopp 8e ISM (c) 2015 McGraw-Hill Ryerson
EXERCISE 2.6
Part A
1. = 1000(1.01) = $1709.14
2. = 1800 1 +
.
= $809.40
3. a) = 2500 1 +
.
= $1746.54
b) = 2500 1 +
.
= $3271.61
Note: 1746.54 1 +
.
= $3271.61
4. = 1000(1.02) + 1500(1.02) = 1082.43 + 1385.77 = $2468.20
5. a) = 800(1.0025) + 700(1.0025) = $1338.29
b) = 800(1.0025) + 700(1.00225) = $1508.69
c) = 800(1.0025) + 700(1.0025) = $1700.79
(1.0025) = 1338.29(1.0025) = $1508.69
(1.0025) = 1508.69(1.0025) = $1700.79
6. At the end of 7 years: X + 1000(1.035) = 2000(1.035)
+ 1316.81 = 1867.02
= $550.21
7. = 4000(1.015) β 1000(1.015) β 2000(1.015)
= 4782.47 β 1126.49 β 2122.73 = $1533.25
8. = 1200(1.015) β 500(1.015) = 1434.74 β 546.72 = $888.02
9. At the end of 4 years:
375 1 +
.
+ 1 +
.
+ 1 +
.
= 1000
476.34 + 1.172887932 + 1.082999507
2.255887439
= 1000
= 523.66
= $232.13
10. a) On December 1, 2015:
+ (1.03) + 1200(1.03) + 900(1.03) = 3000(1.03)
+ 1.0609 + 1350.61 + 1106.89 = 3914.32
2.0609 = 1456.82
= $706.89
b) Balance on September 1, 2015:
= 3000(1.03) β 900(1.03) β 1200(1.03) β 900(1.03)
= 3800.31 β 1074.65 β 1311.27 β 954.81 = $459.58
18. Page 2-17
Brown/Kopp 8e ISM (c) 2015 McGraw-Hill Ryerson
11. = 200(1.03) + 150(1.03) β 250(1.03) + 100(1.03)
= 225.10 + 163.91 β 265.23 + 103 = $226.78
12. At the end of 3 years:
+ 2 (1.1) = 400(1.1) + 300(1.1)
+ 1.502629602 = 330.58 + 153.95
2.502629602 = 484.53
= $193.61
13. At the time of the manβs death:
(1.03) + (1.03) + (1.03) = 50 000
2.17033867 = 50 000
= $22 593. 42
14. (1.006) + 2 (1.006) + 2 = 4000(1.006)
5.11603864 = 4297.70
= $840.04
15. Maturity value of original debt:
= 3000(1.0075) = $3589.24
Equation of value at time 5:
1000(1.03) + 1500(1.03) + = 3589.24(1.03)
1125.50881 + 1639.0905 + = 3696.9172
= $932.32
16. 500 + 800(1.08) = 2000(1.08)
1135.065793
(1.08) = = 0.567532896
2000
= 7.36
17. 1000 = 700(1 + ) + 400(1 + )
By trial and error,
i = j4/4 Right hand side
0.02 949.72
0.015 984.85
0.013 999.33
0.0128 1000.80
0.0129 1000.06
Thus, j4 β 4(0.0129) = 0.0516 = 5.16%
19. Page 2-18
Brown/Kopp 8e ISM (c) 2015 McGraw-Hill Ryerson
EXERCISE 2.6
Part B
1. a) Let X and Y be the two dated values due and periods from now.
Let and be two equivalent dated values of the set at and interest
periods from now.
0
= (1 + ) + (1 + )
= (1 + ) + (1 + )
Multiplying the first equation by (1 + i) and simplifying we obtain
(1 + ) = (1 + ) + (1 + ) = D
which is the condition that and are equivalent
b) Assuming that the times are in years
= [1 + ( β )] + [1 + ( β )]
= [1 + ( β )] + [1 + ( β )]
Multiplying the first equation by [1 + { β )] we obtain
[1 + ( β )] = [1 + ( β )][1 + ( β )]
+ [1 + ( β )] [1 + ( β )]
β [1 + ( β )] + [1 + ( β )] =
2. = 1000(1.08) + 2000 1 +
.
(1.08)
= 1166.40 + 2784.93 = $3951.33
3. On January 1, 2018:
+ (1.02) + 500(1.02) = 5000(1.0225)
+ 1.171659381 + 686.39 = 8528.83
2.171659281 = 7842.44
= $3611.27
4. At the present time:
+ (1.06) = 3000(1.05) + 4000(1.04)
1.88999644 = 2030.52 + 2702.26
1.88999644 = 4732.78
= $2504.12
20. Page 2-19
Brown/Kopp 8e ISM (c) 2015 McGraw-Hill Ryerson
5. Let be the interest rate per year.
At the end of year 18:
(1) 240(1 + ) + 200(1 + ) + 300 =
(2) 360(1 + ) + 700 = + 100
(3) (1 + ) + 600(1 + ) =
Let (1 + ) = . Then,
(1) 240 + 200 + 300 =
(2) 360 + 600 =
(3) + 600 =
From the first two equations:
240 + 200 + 300 = 360 + 600
240 β 160 β 300 = 0
12 β 8 β 15 = 0
=
Β±β
= = 1.5
or β (not applicable)
Substituting = 1.5 into (1) we obtain
240(1.5) + 200(1.5) + 300 =
= $1140
Substuting = 1.5, = 1140 into (3) we obtain
(1.5) + 600(1.5) = 1140
2.25 = 1140 β 900
= .
= $106.67
23. Page 2-22
Brown/Kopp 8e ISM (c) 2015 McGraw-Hill Ryerson
EXERCISE 2.8
Part A
1. 0.6(1.08) = 1
(1.08) = .
log 1.08 = log
.
= 6.637457293 years
2. = 320 000(1.021) = $355 041.15
Increase = $35 041.15
3. a) =
b) =
c) =
. .
= 3.92% =.
. .
= 3.85% =.
. .
= 3.77% =.
. ( . ) .
= 2.39%
.
. ( . ) .
= 1.85%.
. ( . ) .
= 1.32%.
EXERCISE 2.8
Part B
1. Let = $1000.
You need 1000(1.03) U.S. dollars now in U.S. dollars account,
which is equivalent to 1000(1.03) .
= $999.15 Cdn.
This amount invested in a Canadian dollar account will accumulate to
$999.15(1.04) = $1039.12
The implied exchange rate one year from now is
$1000 U. S. = $1039.12 Cdn. OR $0.9624 U. S. = $1 Cdn.
2. Present value of (1 + ) due in n-years at annual effective rate is:
(1 + ) (1 + ) =
Present value of 1 due in years at annual effective rate is:
1 + = = =
24. Page 2-23
Brown/Kopp 8e ISM (c) 2015 McGraw-Hill Ryerson
EXERCISE 2.9
Part A
1. = 40 000(1.04) β 87 645
2. Increase = 2% of 15 000(1.02) β 345
3. (1 + ) = 2
= 2 /
β 1
= 0.065041089
= 6.50%
4. = 48 000(1.05) = $372 556.20
5. P = 0.25 S = 10 i = 0.10
(0.25)(1.10) = 10
(1.10) = 40
= .
= 38.70393972 hours
= 1.61 days
EXERCISE 2.9
Part B
1. a) Number of flies at 7 a.m. = 100 000(1.04) β 288 337
Number of flies at 11 a.m. = 100 000(1.04) β 364 838
Increase between 7 a.m. and 10 a.m. = 76 501
b) (1.04) = 2
= = 17.67298769 periods β 707 minutes.
At 0:47 a.m. there will be 20 000 flies in the lab.
2. 200 000(1 + ) = 250 000
(1 + ) = 1.25
= (1.25) / β 1
= 0.022565183
Population in 2014 = 200 000(1 + ) = 312 500
Population in 2019 = 200 000(1 + ) = 349 386
Increase in population = 36 886
25. Page 2-24
Brown/Kopp 8e ISM (c) 2015 McGraw-Hill Ryerson
1. a) = 1500
b)
c)
= 1500
= 1500
.
EXERCISE 2.10
Part A
(1.09) . = $1706.99
1 +
.
= $1715.94
( . )( . )
= $1716.81
2. a) = 8000(1.02) = $5383.77
b) = 8000 1 +
.
= $5362.80
c) = 8000 ( . )( ) = $5362.56
3. ( ) = 1.5
5 = ln 1.5
.
= = 0.081093022 = 8.11%
= β 1 = 0.084471771 = 8.45%
4. a) 800 1 +
.
= 1200
1 +
.
= 1.5
=
.
= 2466.782157 β 2467 days = 6 years, 277 days
On November 8, 2020 the deposit will be worst at least $1200.
b) 800 . = 1200
.
= 1.5
0.06 = ln 1.5
=
.
β 6.757751802 years β 6 years 277 days.
On November 8, 2016 the deposit will be worth at least $1200.
5. = 2 = 3
5 = ln 2 = ln 3
= = = = 7.924812504 years
6. a) = 1000 . ( )
= $1173.51
b)
c)
= 1000 1 +
.
= $1175.49
= 1000[1 + (0.085)(2)] = $1170
She should accept offer c) as it has the lowest interest charges.
28. Page 2-27
Brown/Kopp 8e ISM (c) 2015 McGraw-Hill Ryerson
=
12. Maturity Value of Loan = 10 000 1 +
.
= $20 121.96
On January 1, 2019:
2000(1.02) + (1.02) + = 20 121.96
2536.48 + 2.08243216 = 20 121.96
= $8 444.68
13. 1 +
.
= 1.25
.
.
β 1810 days
4 years, 350 days from November 20, 2013 is November 5, 2017.
14. At the present time:
(1.0075) + 2 (1.0075) β + 3 (1.0075) = 5000
5.695834944 = 5000
= $877.83
15. a) at : 1 + = 3
= 12 3 β 1 β 11.04%
b) at : 1 + = 3
= 365 3 β 1 β 10.99%
c) at β‘ : = 3
10 = ln 3
= β 10.99%
16. 1000(1.045) = 1246.18
(1.045) = 1.24618
=
.
.
= 5
= 1000(1.06) = $1338.23
17. Discounted value of the payments option:
= 20 000 + 20 000(1.04) + 20 000(1.04)
= 20 000 + 17 096.08 + 14 613.80 = $51 709.88
Cash option is better by $1709.88
29. Page 2-28
Brown/Kopp 8e ISM (c) 2015 McGraw-Hill Ryerson
18. Maturity value on October 6, 2012:
= 2000 1 +
.
= $2345.78
Proceeds on January 16, 2014:
= 2345.78 1 +
.
1 + (0.09) = $2199.72
Compound discount = 2345.78 β 2199.72 = $146.06
19. = 500 1 +
.
1 +
.
1 +
.
= $715.95
500(1 + ) = 715.95
= 6.17%
20. = 2000(1.02) (1.05) = $1213.12
21. a) 1000(1.06) = $1338.23
b) 1000 1 +
.
= $1348.85
c) 1000 . ( ) = $1349.86
22. She will receive 2000(1.05) 1 + (0.05) = $2584.47
23. a) = 5000 1 +
.
1 + (0.036) = $5354.30
( )
b) = 5000 1 +
. = $5354.3024. Value on December 13, 2013:
2000(1.025) 1 + (0.1) = $1618.57
25. a) Equation of value at 12 months:
(1.0075) + 2 (1.0075) + 2 = 4000(1.0075)
1.069560839 + 2.076133469 + 2 = 4375.23
5.145694308 = 4375.23
= $850.27
b) Equation of value at 12 months:
.
+ 2
. ( )
+ 2 = 4000
.
1.0698026 + 2.076423994 + 2 = 4376.70
5.146254254 = 4376.70
= $850.46
30. Page 2-29
Brown/Kopp 8e ISM (c) 2015 McGraw-Hill Ryerson
26. a) At = 10%
1 +
.
= 2
=
(
.
)
β 2530.33 = 2531 days
β 6 years, 341 days OR 6 years, 11 months, 7 days
b) At = 10%
. = 2
0.1 = ln 2
= .
= 6.931471806 years
β 6 years, 340 days OR 6 years, 11 months, 6 days
c) At = 10%
(1.05) = 2
= 28.07103453 quarters
= 7 years, 0 months, 7 days
d) At = 10%
(1.05) = 2
= 14.20669908 half years
= 7 years, 38 days OR 7 years, 1 months, 8 days
Rule of 70
a) = 2555 days = 7 years
c) = 28 quarters = 7 years
d) = 14 half years = 7 years
31. Page 2-30
Brown/Kopp 8e ISM (c) 2015 McGraw-Hill Ryerson
Case Study I β Payday Loans
a) Calculate j such that:
(1 + ) = (1.25)
1 + = 336.188
= 335.2%
b) If you are one week late, the penalty is 10% of 1000 or another $100.
Thus you borrow $800 and pay back $1100 in 21 days. Thus:
(1 + ) =
1 + = 253.415
= 252.4%
If you are two weeks late, you owe $1200 in 28 days. Thus:
(1 + ) =
1 + = 197.458
= 196.5%
c) When the fee is 15%:
(1 + ) = (1.15)
1 + = 38.2366
= 37.2%
At 20%:
(1 + ) = (1.20)
1 + = 115.976
= 114.98%
At 30%
(1 + ) = (1.30)
1 + = 934.687
= 933.7%
Case Study II β Overnight Rates
a) = 20,000,000
b) = 20,000,000
.
= $2191.78
.
β 1 = $2191.90
c) =
, ,
, ,
β 1 = 0.0328 = 3.28%
32. Page 2-31
Brown/Kopp 8e ISM (c) 2015 McGraw-Hill Ryerson
SOLUTIONS MANUAL for Mathematics of Finance Canadian 8th
Edition by Brown IBSN 0070876460
Download: https://downloadlink.org/p/solutions-manual-for-mathematics-
of-finance-canadian-8th-edition-by-brown-ibsn-0070876460/
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