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Solutions To End-Of-Chapter Problems

This document provides solutions to end-of-chapter problems involving calculations using financial calculators. The problems cover topics such as calculating future and present values given rates of return, time periods, and cash flows. Step-by-step instructions are provided for entering data into financial calculators to solve each problem.

Uploaded by

Ammara Mubashar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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118 views2 pages

Solutions To End-Of-Chapter Problems

This document provides solutions to end-of-chapter problems involving calculations using financial calculators. The problems cover topics such as calculating future and present values given rates of return, time periods, and cash flows. Step-by-step instructions are provided for entering data into financial calculators to solve each problem.

Uploaded by

Ammara Mubashar
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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SOLUTIONS TO END-OF-CHAPTER PROBLEMS

6-1

0
|

10%

1
|

2
|

3
|

4
|

PV = 10,000

5
|
FV5 = ?

FV5 = $10,000(1.10)5
= $10,000(1.61051) = $16,105.10.
Alternatively, with a financial calculator enter the following:
I = 10, PV = -10000, and PMT = 0. Solve for FV = $16,105.10.
6-2

0 7%
|
PV = ?

5
|

10
|

15
|
FV20

20
|
= 5,000

With a financial calculator enter the following:


and FV = 5000. Solve for PV = $1,292.10.
6-3

0
6.5%
|
PV = 1

N = 5,

N = 20, I = 7, PMT = 0,

n = ?
|
FVn = 2

2 = 1(1.065)n.
With a financial calculator enter the following:
0, and FV = 2. Solve for N = 11.01 11 years.

I = 6.5, PV = -1, PMT =

6-4

Using your financial calculator, enter the following data: I = 12; PV =


-42180.53; PMT = -5000; FV = 250000; N = ? Solve for N = 11. It will
take 11 years for John to accumulate $250,000.

6-5

0
i = ?
|
PV = 250,000

FV18

18
|
= 1,000,000

With a financial calculator enter the following: N = 18, PV = -250000,


PMT = 0, and FV = 1000000. Solve for I = 8.01% 8%.
6-6

6-7

0
|

7%

1
|
300

2
|
300

3
|
300

4
|
300

5
|
300
FVA5 = ?

With a financial calculator enter the following:


and PMT = 300. Solve for FV = $1,725.22.
0 7%
1
2
3
4
5

N = 5, I = 7, PV = 0,

|
300

|
300

|
300

|
300

|
300

With a financial calculator, switch to BEG and enter the following: N =


5, I = 7, PV = 0, and PMT = 300. Solve for FV = $1,845.99. Dont forget
to switch back to END mode.

6-8

0
|

8%

1
|
100

2
|
100

3
|
100

4
|
200

5
|
300

PV = ?

6
|
500
FV = ?

Using a financial calculator, enter the following:


CF0
CF1
CF4
CF5
CF6
and

=
=
=
=
=
I

0
100,
200
300
500
= 8.

Nj = 3
(Note
(Note
(Note
Solve

calculator will show CF2 on screen.)


calculator will show CF3 on screen.)
calculator will show CF4 on screen.)
for NPV = $923.98.

To solve for the FV of the cash flow stream with a calculator that doesnt
have the NFV key, do the following: Enter N = 6, I = 8, PV = -923.98, and
PMT = 0. Solve for FV = $1,466.24. You can check this as follows:
0
|

8%

1
|
100

2
|
100

3
|
100

4
|
200

(1.08)3
(1.08)

(1.08)5

6-9

5
6
|
|
300
500
(1.08)
324.00
(1.08)2
233.28
125.97
136.05
146.93
$1,466.23

Using a financial calculator, enter the following:


-20000, and FV = 0. Solve for PMT = $444.89.

N = 60, I = 1, PV =

EAR = 1 N o m - 1.0
m

= (1.01)12 - 1.0
= 12.68%.
Alternatively, using a financial calculator, enter the following: NOM% =
12 and P/YR = 12. Solve for EFF% = 12.6825%. Remember to change back to
P/YR = 1 on your calculator.

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