APPENDIX G
Time Value of Money
SOLUTIONS TO BRIEF EXERCISES
BRIEF EXERCISE G-1
BRIEF EXERCISE G-2
BRIEF EXERCISE G-3
BRIEF EXERCISE G-4
BRIEF EXERCISE G-5
BRIEF EXERCISE G-6
BRIEF EXERCISE G-7
(a) (b)
BRIEF EXERCISE G-8
(a) i = 10%
BRIEF EXERCISE G-8 (Continued)
BRIEF EXERCISE G-9
BRIEF EXERCISE G-10
BRIEF EXERCISE G-11
i = 8%
BRIEF EXERCISE G-12
i = 5%
BRIEF EXERCISE G-13
i = 5%
Present value of principal to be received at maturity:
BRIEF EXERCISE G-14
The bonds will sell at a discount (for less than $400,000). This may be proven
as follows:
Present value of principal to be received at maturity:
BRIEF EXERCISE G-16
i = 4%
BRIEF EXERCISE G-17
i = 5%
BRIEF EXERCISE G-18
i = ?
BRIEF EXERCISE G-19
i = 11%
BRIEF EXERCISE G-20
i = ?
BRIEF EXERCISE G-21
i = 9%
BRIEF EXERCISE G-22
i = 9%
BRIEF EXERCISE G-23
i = 11%
BRIEF EXERCISE G-24
BRIEF EXERCISE G-25
BRIEF EXERCISE G-26
BRIEF EXERCISE G-27
(a)
(b)
Inputs:
Answer:
Inputs:
16,000
0
Answer:
BRIEF EXERCISE G-28
(a)
Note—set payments at 12 per year.
(b)
Note—set payments to 1 per year.
Inputs:
7.25
Answer:
Inputs:
?
Answer: