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SW 5 Problem No. 30
SW 5 Problem No. 30
30
A company invests $10,000 today to be repaid in 5 years in one lump sum at 12% compounded annually.
If the rate of inflation is 3% compounded annually, approximately how much profit, in present day
dollars, is realized over the 5 years?
GIVEN:
REQUIRED:
0 1 2 3 4 5
SOLUTION:
[ ]
5
1+i r
F=P
1+i fr
[ ]
5
1+ 0.12
¿ 10000
1+ 0.03
F=15,202.11417
Profit=F−P
¿ 15,202.11417−10,000
Profit = $5202.11417
Problem no. 30
A company invests $10,000 today to be repaid in 5 years in one lump sum at 12% compounded annually.
If the rate of inflation is 3% compounded annually, approximately how much profit, in present day
dollars, is realized over the 5 years?
GIVEN:
REQUIRED:
0 1 2 3 4 5
SOLUTION:
[ ]
5
1+i r
F=P
1+i fr
[ ]
5
1+ 0.12
¿ 10000
1+ 0.03
F=15,202.11417
Profit=F−P
¿ 15,202.11417−10,000
Profit = $5202.11417