ASSIGNMENT 2

4.31, 4.52, 4.54, 4.57, 4.66, 4.77, 4.91, 4.97, 4.116

GROUP 6:
Student ID Full name
EVEVIU19004 Lê Hoàng Thu Thảo
IEIEIU19069 Vũ Đức Thành
IEIEIU19054 Huỳnh Tuấn Khải
IEIEIU19019 Võ Thị Thu Thảo
IEIEIU19004 Nguyễn Đình Hải
IEIEIU19023 Võ Hà Trung
IELSIU19242 Nguyễn Thanh Phương
IEIEIU19055 Tống Phước Khoa
IEIEIU19041 Lê Gia Bảo

4.31: i=2%
0 1 2 ... 11 12

A= $10,000

P=?

a. P = $10,000 (P/A, 2%, 12) = $10,000 (10.5753) = $105,573

b. P = $10,000 + $10,000 (P/A, 2%, 11) = $107,868
c. The present equivalent in part (b) is higher because
the cash flows are not as far into the future, so less
discounting occurs
4.52:
A1 =$1500; G; A =$20,000; N= 20; i=10%
Cf 1: PW = A1(P/A, 10%, 20) + G(P/G. 10%, 20) = 1500(8.5136) +55.407G
Cf2: 20000(P/A, 10%, 20) =$ 170272
Cf1 =Cf2 → G = $2842.

4.54:

Defer for 12 months

F12 = P(F/P, 0.5%, 12) = 24000*1.0617 =$25480
=P12
A= P12(A/P, 0.5%, 36) = 25480*0.0304 = $774.5

4.57:

Deferred annuity, A= $500; period are months

P71 = A(P/A, ¾%, 60) = 500*48.1734 = $ 24086.7 = F71
 P0 = F71(P/F, ¾%, 71) = 24086.7*0.58836 = $14171.23

4.66: i=8%
F5
F4=P4

F4 =A (F/A, 8%, 4) = 100*4.5061 = $450.61= P4

F5 = P4(F/P, 8%, 1) + A(P/A, 8%, 2) = 450.61*1.08+100*1.7833 =486.66+178.33
= $665
4.77:

a. F =$10000, G= $600, N=6, i=?

P0 = G(P/G, i,6) =600(P/G,I,6)
F =10000 = P0(F/P, i%,6) =600(P/G,i,6)
(F/P,i,6)
If i = 7%, F = 600*10.978*1.5007=
$9,884.81 < $10,000,
If i = 8%, F= 600*10.523*1.5869 =
$10,019.37 > $10,000,
Thus, 7% < i < 8%. Using linear
interpolation,
(8% - 7%)/(10,019.37 - 9,884.81) = (8% -i%)/(10019.37-10000) → i =7.725%
b. F= 10000, G= 600, I =5%, N= ?
 F = $600 (P/G, 5%, N) (F/P, 5%, N) = $10,000
If N = 6, F = $9,622.99 < $10,000,
If N = 7, F= $13,704.03 > $10,000
Thus, 6 < N < 7. Using linear interpolation,
(13,704.03 - 9,622.99 )/(7 - 6 ) = (10,000 - 9,622.99)/( N - 6 )
 N = 6.1 periods. If an integer value of N is desired, choose N = 7 periods
c. G= 1000, N=12, I =10%, F=?
F = 1,000(P/G,10%,12)(F/P,10%,12) =1,000(29.901)(3.1384) = $93,841.30
d. F= 8000, N=6, I =10%, G=?
P = F(P/F,10%,6) =G(P/G, 10%, 6) → G =8000*0.5645/9.684 = $466.33

4.91:

a.Because i≠f, so
P = [A1(1- (P/F,i,N)(F/P,f,N)]/(i-f)
= [10000(1-(0.4039*1.71820)/(0.12-
0.07) = $61,203.8
b. A =P(A/P,I,8)
=61203.8*0.2013 = $12320

4.97:
P = 1,000 (P/F, 8%, 1) + 2,000 (P/F,10%,1)(P/F, 8%, 1) + 1,000 (P/F, 6%, 1)(P/F,
8%, 1)(P/F, 10%, 1)(P/F, 8%, 1) + 2,000 (P/F, 10%, 1)(P/F, 6%, 2)(P/F, 8%,
1)(P/F, 10%, 1)(P/F, 8%, 1)
= 1,000 (0.9259) + 2,000 (0.9091)(0.9259) + 1,000 (0.9434)(0.9259)(0.9091)
(0.9259) +2,000 (0.9091)(0.8900)(0.9259)(0.9091)(0.9259) = $4,606

4.116:

r= 20% compounded continuously

- Set Equivalent cash outflows = Equivalent cash inflows
- Using time 9 as the equivalence point, and appendix D:
Z (F/P,20%,9) = 500(F/A,20%,5) + Z (F/P,20%,6)
 6.0496*Z = $500(7.7609) + 3.3201*Z ,
so Z = $1,421.67