Concept explainers
a.
To calculate: The semi-annual payment of the investment.
Introduction:
When payments are made or received in a series at equivalent intervals, they are termed as an annuity. Such payments can be made weekly, monthly, quarterly, or annually.
a.
Answer to Problem 45P
The semi-annual payment of the investment is $8,886.56
Explanation of Solution
The calculation of the semi-annual payment of the investment is shown below.
b.
To calculate: The revised semiannual payment after a change in rate from 10% to 12%.
Introduction:
When payments are made or received in a series at equivalent intervals, they are termed as an annuity. Such payments can be made weekly, monthly, quarterly, or annually.
b.
Answer to Problem 45P
The revised semiannual payment after a change in rate from 10% to 12% is $7,609.48.
Explanation of Solution
The calculation of the revised semiannual payment is shown below.
Working notes:
1. Requirement of additional amount:
The calculation of the requirement of additional amount is shown below.
2.
The calculation of the future value of the payment made at the beginning of the 4th year is shown below.
3. Future value of the payment from the beginning of the 4th year to the end of the 9th year:
The calculation of the future value of the payment from the beginning of the 4th year to the end of the 9th year is shown below.
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Chapter 9 Solutions
Loose Leaf for Foundations of Financial Management Format: Loose-leaf
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