Homework Answers
the equation as per the requirements becomes,
$5000 x PVF(10%, 5) = $4500 x PVF(10%, t)
therefore,
$5000 x 0.6209 = $4500 x PVF(10%, t)
therefore,
$3104.50 = $4500 x PVF(10%, t)
therefore,
PVF(10%, t) = $3104.50/$4500
therefore,
PVF(10%, t) = 0.6899
now.
the closest Present value factor to 0.6899 is found in the financial table in the 10% interest rate column and
4th time period row. Which is 0.6830
Therefore, t = 4 years
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