3-8. Using interest tables and interpolation as far as possible, determine the approximate rates of interest indicated by the following valuations of prospective series of future cash receipts: (a) $8,000 now for $1,300 at the end of each year for 10 years. (Ans. 10%) (b) $6,000 now for $680 at the end of each year for 20 years. (Ans. 9.5%) (c) $6,000 now for $400 at the end of each year for 15 years. (Ans. 0%) (d) $10,000 now for $300 at the end of the first year, $350 at the end of the second year, and receipts increasing by $50 at the end of each year to a final receipt of $1,250 at the end of the 20th year. (Ans. 3.7%) (e) $5,000 now for $225 at the end of each year forever. (Ans. 4.5%)

3-8. Using interest tables and interpolation as far as possible, determine the approximate rates of interest indicated by the following valuations of prospective series of future cash receipts: (a) $8,000 now for $1,300 at the end of each year for 10 years. (Ans. 10%) (b) $6,000 now for $680 at the end of each year for 20 years. (Ans. 9.5%) (c) $6,000 now for $400 at the end of each year for 15 years. (Ans. 0%) (d) $10,000 now for $300 at the end of the first year, $350 at the end of the second year, and receipts increasing by $50 at the end of each year to a final receipt of $1,250 at the end of the 20th year. (Ans. 3.7%) (e) $5,000 now for $225 at the end of each year forever. (Ans. 4.5%)

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA3: Time Value Of Money

Section: Chapter Questions

Problem 12E

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