Solution TVM Assignment 2

Q1.

Time 10
PMT 10,000.00
interest 9%
Deposit required at beginning
of ten years ($64,176.58) ($64,176.58) PV

Time 20
Answer ($1,254.43) ($1,254.43) PMT

Q2.

pmt (4,000.00)
interest 12%
nper 15
$149,118.86 FV

Answer $19,963.85 PMT

Q3.

pmt 13,000.00
nper 10
interest 8%
FV $203,391.34 Answer

PMT $14,040.00

Q4.

pmt 8000
nper 5
interest 6% ($33,698.91) ($39,338.59)
PV ($35,720.84) ($35,720.84)

PMT $8,480.00
Q5.

FV 10,000
Nper 5
interest 6%
compounding semiannually

PV ($7,440.94)
$1,744.61 PMT
Q6.

1 2 3
Principal 20000 $13,898.90 $7,248.71
PMT ($7,901.10) ($7,901.10) ($7,901.10)
Interest 1800 $1,250.90 $652.38

Amount of Principal left to be

repaid $13,898.90 $7,248.71 $0.00

Q7.

pmt 15,000.00
interest 4%
nper 10

Answer $121,663.44

Q8.

FV 800,000
Year 15
interest 4%

Answer ($38,416.23)

Q9.

pmt -45000
interest 4%
nper 5

Answer $990,855.18

Q10.
interest 5%
years 3
FV 16000

Answer ($13,821.40)

Q11.

PV (100,000)
interest 4%
nper 4

pmt(Answer) $27,549.00 Answer

Q12.

Annuity A Annuity B
pmt 16,000 12,000
nper 8 12
interest 7% 7%
Initial cost (75,000) (75,000)

PV of inflows $102,229 $95,312

NPV $27,229 $20,312

The investor should invest in Annuity A

Q13.

Principal 300,000
interest 8%
nper 10
pmt ($22,074.53)

Q14.

pmt (17,000)
nper 10
interest 7%
FV after 10 years $234,880
FV after 15th year $462,043.75