A-24
A P P E N D I X B
ANSWERS TO SELECTED END!OF!CHAPTER PROBLEMS
We present some intermediate steps and! nal an-
swers to selected end-of-chapter problems. Please
note that your answer may differ slightly due to
rounding differences. Also, some of the problems
may have more than one correct solution depending
on what assumptions are made in working the prob-
lem. Finally, many of the problems involve verbal
discussion as well as numerical calculations; the ver-
bal material is not presented here.3-2 $2,500,000
3-4 a, possibly c
3-6 a. $50,000
b. $115,000
3-8 $12,681,482
3-10 a. NWC 08! $192,000,000
NWC 07! $210,000,000
b. FCF! $58,000,0004-2 D/A! 58.33%
4-4 M/B! 4.2667
4-6 ROE! 8%
4-8 15.31%
4-10 NI/S! 2%; D/A! 40%
4-12 TIE! 3.86
4-14 ∆ROE! "5.54%; QR! 1.2
4-16 a
4-18 $262,500
4-20 $50
4-22 a. Current ratio! 1.98; DSO! 76.3
days; Total assets turnover! 1.70;
Debt ratio! 61.9%5-2 PV! $1,292.10
5-4 N! 11.01 years
5-6 FVA 5! $1,725.22; FVA5 Due! $1,845.99
5-8 PMT! $444.89; EAR! 12.6825%
5-10 a. $895.42
b. $1,552.92
c. $279.20
d. $499.99; $867.13
5-12 a. 7%
b. 7%
c. 9%
d. 15%
5-14 a. $6,374.97
b. $1,105.13c. $2,000.00
d(1). $7,012.47
d(2). $1,160.38
d(3). $2,000.00
5-16 PV7%! $1,428.57; PV14%! $714.29
5-18 a. Stream A: $1,251.25
Stream B: $1,300.32
b. Stream A and Stream B: $1,600
5-20 Contract 2; PV! $10,717,847.14
5-22 a. $802.43
b. Pymt 1: Int! $500 and Princ pymt!
$302.43; Pymt 2: Int! $484.88 and
Princ pymt! $317.55
c. $984.88
5-24 a. $279.20
b. $276.84
c. $443.72
5-26 $17,290.89; $19,734.26
5-28 INOM! 7.8771%
5-30 a. E! 63.74 yrs; K! 41.04 yrs
b. $35,825.33
5-32 $496.1 1
5-34 a. PMT! $10,052.87
b. Yr 3: Int/Pymt! 9.09%; Princ/Pymt
! 90.91%
5-36 a. $5,308.12
b. $4,877.09
5-38 $309,015
5-40 $9,3856-2 2.25%
6-4 1.5%
6-6 21.8%
6-8 8.5%
6-10 6.0%
6-12 0.35%
6-14 a. r 1 in Year 2! 6%
b. I 1! 2%; I 2! 5%
6-16 14%
6-18 a. r 1! 9.20%; r 5! 7.20%7-2 a. 7.22%
b. $988.46
7-4 YTM! 6.62%; YTC! 6.49%; most likely
yield! 6.49%