A small company plans to spend $10,000 in year 2 and $10,000 in year 5. At an interest rate of effective 10% per year, compounded semiannually, the equation that represents the equivalent annual worth in years 1 through 5 is: (a) A = 10,000(P∕F10%,2)(A∕P,10%,5) + 10,000(A∕F,10%,5) (b) A = 10,000(A∕P,10%,4) + 10,000 (A∕F,10%,5) (c) A = 10,000(P∕F,5%,2)(A∕P,5%,10) + 10,000 (A∕F,5%,10) (d) A = [10,000(F∕P,10%,5) + 10,000] (A∕F,10%,5)
A small company plans to spend $10,000 in year 2 and $10,000 in year 5. At an interest rate of effective 10% per year, compounded semiannually, the equation that represents the equivalent annual worth in years 1 through 5 is: (a) A = 10,000(P∕F10%,2)(A∕P,10%,5) + 10,000(A∕F,10%,5) (b) A = 10,000(A∕P,10%,4) + 10,000 (A∕F,10%,5) (c) A = 10,000(P∕F,5%,2)(A∕P,5%,10) + 10,000 (A∕F,5%,10) (d) A = [10,000(F∕P,10%,5) + 10,000] (A∕F,10%,5)
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question
A small company plans to spend $10,000 in year 2
and $10,000 in year 5. At an interest rate of effective
10% per year, compounded semiannually, the equation
that represents the equivalent annual worth in
years 1 through 5 is:
(a) A = 10,000(P∕F10%,2)(A∕P,10%,5)
+ 10,000(A∕F,10%,5)
(b) A = 10,000(A∕P,10%,4) + 10,000
(A∕F,10%,5)
(c) A = 10,000(P∕F,5%,2)(A∕P,5%,10)
+ 10,000 (A∕F,5%,10)
(d) A = [10,000(F∕P,10%,5) + 10,000]
(A∕F,10%,5)
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