   Chapter 5, Problem 13P Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
ISBN: 9781285867977

Solutions

Chapter
Section Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
ISBN: 9781285867977
Textbook Problem

TIME FOR A LUMP SUM TO DOUBLE How long will it take $200 to double if it cams the following rates? Compounding occurs once a year. a. 7% b. 10% c. 18% d. 100% (a) Summary Introduction To calculate: Time for a lump sum to double a) at 7% Lump Sum: Lump sum is a large amount of money paid on a single occasion instead of paying small amount time to time. The amount has been paid for the value of an asset or for other purposes of retirement. Explanation Solution: The formula to calculate time period is, PV=FV(1+i)n (I) Here, • PV is present value. • FV is future value. • i is interest rate. • n is number of years. Substitute$1 for PV, $2 for FV and 7% for I in equation (I).$1=\$2(1+0.07)n(1+0

(b)

Summary Introduction

To calculate: Time for a lump sum to double at 10%

(c)

Summary Introduction

To calculate: Time for a lump sum to double at 18%

(d)

Summary Introduction

To calculate: Time for a lump sum to double at 100%.

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