Solutions Manual For Contemporary Business Mathematics with Canadian Applications 13th Edition By Sieg Hummelbrunner, Kelly Halliday, Ali Hassanlou

SOLUTIONS
MANUAL
Kelly Halliday

Ali R. Hassanlou




Contemporary Business Mathematics
with Canadian Applications
13th Edition

S. A. Hummelbrunner
Kelly Halliday


Ali R. Hassanlou

All Chapters Arranged Reverse: 16-1




This is The Original Solutions Manual for 13th Edition,
All other Files in The Market are Fake/Old/Wrong.

,Chapter 16 Investment Decision Applications

Exercise 16.1
A. 1. Alternative 1:
PV of $20,000 in three years  20,000(l.l23)  20,000(0.711780)  $14,236
PV of $60,000 in six years  60,000(1.126)  60,000(0.506631)  .30,398
PV of Alternative 1  $44,634 .
Alternative 2:
PV of $13,000 at the end of each of the next six years
 13,000  13,000(4.111407)  $53,448
é1 - 1.12 ù -6

ê 0.12 ú
ë û
Since PV of Alternative 2 > PV of Alternative 1, Alternative 2 is preferred at 12%.
PROGRAMMED SOLUTION
(Set P/Y  l; C/Y  l)
Alt.1 0 PMT 20,000 FV 12 I/Y 3 N CPT PV 14,236
Alt.1 0 PMT 60,000 FV 12 I/Y 6 N CPT PV 30,398
Alt.2 0 FV 13,000 PMT 12 I/Y 6 N CPT PV 53,448
2. Alternative 1:
PV of $50,000  50,000(1.154)  50,000(0.571753)  $28,588
PV of $40,000  40,000(l.l57)  40,000(0.375937)  15,037
PV of $30,000  30,000(1.1510)  30,000(0.247185)  7416
PV of Alternative 1  51,041 .
Alternative 2:
PMT  750; i  15%; n  120
c ,p  1  1.011715  1  1.1172%
1 1.15
1
12


12
PV of Alternative 2  750  750(64.26100)  $48,196 .
é1 - 1.011715 -120
ù
ê 0.011715 ú
ë û
Since PV of Alternative 1 > PV of Alternative 2, Alternative 1 is preferred.
Alt.1 (Set P/Y  l; C/Y  1) 0 PMT 50,000 FV 15 I/Y 4 N CPT PV 28,588


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,676 ISM for Hummelbrunner/Halliday/Hassanlou, Contemporary Business Mathematics, Thirteenth Edition



Alt.1 0 PMT 40,000 FV 15 I/Y 7 N CPT PV 15,037
Alt.1 0 PMT 30,000 FV 15 I/Y 10 N CPT PV 7416
Alt.2 (Set P/Y  l2; C/Y  l) 0 FV 750 PMT 15 I/Y 120 N CPT PV 48,196
3. Alternative 1:
PV of $15,000 now  $15,000
PV of $20,000 in five years  20,000(l.02520)  20,000(0.610271)  12,205
PV of Alternative 1  $27,205 .
Alternative 2:
PV of $1500 at the end of every three months for five years
 1500  1500(15.589162)  $23,384 .
é1 - 1.025-20 ù
ê 0.025 ú
ë û
In this case, “the smaller the better” principle applies.
Since PV of Alternative 2 < PV of Alternative 1, Alternative 2 is preferred.
Alt.1 (Set P/Y  l; C/Y  4) 0 PMT 20,000 FV 10 I/Y 5 N CPT PV 12,205
Alt.2 (Set P/Y  4; C/Y  4) 0 FV 1500 PMT 10 I/Y 20 N CPT PV 23,384
4. Alternative 1:
PMT  2500; i  7%; n  14; c 
1
2
 1  1.034408  1  3.4408%
1
p = 1.07 2




PVn  2500  2500(10.964017)  $27,410
é1 - 1.034408 -14
ù
ê 0.034408 ú
ë û
PV of $10,000 now  . 10,000
PV of Alternative 1  $10,000 + $27,410 = $37,410
Alternative 2:
PMT  600; i  7%; n  84; c 
1
12
p  1  1.005654  1  0.5654%
1
1.07 12




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, CHAPTER 16: Investment Decision Applications 677


PVn(due)  600(1.005654)
é1 - 1.005654-84 ù
ê 0.005654 ú
ë û
 600(1.005654)(66.721382)  $40,259
For cost, since PV of Alternative 1 < PV of Alternative 2, Alternative 1 is preferred.
Alt.1 (Set P/Y  2; C/Y  l) 0 FV 2500 PMT 7 I/Y 14 N CPT PV 27,410.03
AIt.2 (Set P/Y  12; C/Y  1) (“BGN” Mode) 0 FV 600 PMT 7 I/Y 84 N CPT PV
40,259




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