Corporate finance: Core principles and applications Chapter 4 porblem 2,3,4,5, a

Question

Corporate finance: Core principles and applications Chapter 4 porblem 2,3,4,5, and 11

CHAPTER 4: PROBLEM 2 (a through c) A. B. C. Present Value 3,200 3,200 3,200 Interest Rate 6% 8% 6% Number of Years 10 10 20 Future Value = CHAPTER 4: PROBLEM 3 A. B. C. D. Future Value = 15,451 51,557 886,073 550,164 Interest Rate 7% 9% 14% 16% Number of Years 12 8 19 24 Present Value = CHAPTER 4: PROBLEM 4 A. B. C. D. Present Value = 217 432 41,000 54,382 Future Value 307 896 162,181 483,500 Number of Years 3 10 13 26 Interest Rate CHAPTER 4: PROBLEM 5 A. B. C. D. Present Value = 625 810 18,400 21,500 Future Value 1,284 4,341 402,662 173,439 Interest Rate 9% 11% 7% 10% Number of Years (or Periods) CHAPTER 4: PROBLEM 11 Discount Rate 5% 13% 18% Year 1: $960 $960 $960 Year 2: $840 $840 $840 Year 3: $1,935 $1,935 $1,935 Year 4: $1,350 $1,350 $1,350 Present Value @ 5%, 13%, and 18% = (Note: Use the built-in NPV formula in Excel.)

Explanation / Answer

FV = PV (1+r)^n

PV = FV / (1+r)^n

Problem No. 2:

A: FV = 3200 (1+.06)^10 = $5730.71

B: FV = 3200 (1+.08)^10 = $6908.56

C: FV = 3200 (1+.06)^20 = $10262.83

Problem No. 4:

PV = FV / (1+r)^n

A: PV = 15451 / (1+.07)^12 = $6860.43

B: PV = 51557 / (1+.09)^8 = $25874.72

C: PV = 886073 / (1+.14)^19 = $73498.31

D: PV = 550164 / (1+.16)^24 = $15613.51

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