Calculate the present value of $9,000 received five years from today if your investments pay (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) |
Present Value | ||
a. | 6 percent compounded annually | $ |
b. | 8 percent compounded annually | |
c. | 10 percent compounded annually | |
d. | 10 percent compounded semiannually | |
e. | 10 percent compounded quarterly |
Present value = Future value x Present value factor
Present value factor
= 1 / (1 + r) ^ n
Where,
r = Rate of interest
n = Number of periods
When interest is compounded semi-annually or quarterly, interest rate is divided by 2 and 4 respectively and time period is multiplied by 2 and 4 respectively
a)
Present value factor
= 1 / 1.06 ^ 5
= 1 /1.338225
= 0.747258
So, Present value = $9,000 x 0.747258
= $6,725.32
b)
Similarly,
Present value factor
= 1 / 1.08^5
= 1 / 1.469328
= 0.680583
So, Present value = $9,000 x 0.680583
= $6,125.25
c)
Present value factor
= 1 / 1.10^5
= 1 / 1.61051
= 0.620921
So, Present value = $9,000 x 0.620921
= $5,588.29
d)
Since interest is compounded semi-annually, interest rate will be 10 / 2 = 5% per period and time period will be 5 x 2 = 10 semi-annual periods
So, Present value factor
= 1 / 1.05^10
= 1 / 1.628895
= 0.613913
So, Present value = $9,000 x 0.613913
= $5,525.22
e)
Since interest is compounded quarterly, interest rate will be 10 / 4 = 2.5% per period and time period will be 5 x 4 = 20 quarters
So, Present value factor
= 1 / 1.025^20
= 1 /1.638616
= 0.610271
So, Present value = $9,000 x 0.610271
= $ 5,492.44
Calculate the present value of $9,000 received five years from today if your investments pay (Do...
Calculate the present value of $6,000 received five years from today if your investments pay (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) Present Value a. 7 percent compounded annually b. 9 percent compounded annually c. 11 percent compounded annually d. 11 percent compounded semiannually e. 11 percent compounded quarterly
Calculate the future value in six years of $9,000 received today if your investments pay (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) Future Value a. 6 percent compounded annually $ b. 8 percent compounded annually c. 10 percent compounded annually d. 10 percent compounded semiannually e. 10 percent compounded quarterly
Calculate the future value in five years of $6,000 received today if your investments pay (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) a. 7 percent compounded annually b. 9 percent compounded annually c. 11 percent compounded annually d. 11 percent compounded semi-annually e. 11 percent compounded quarterly
Calculate the present value of $9,000 received four years from today if your investments pay (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16))
22. Calculate the present value of $5,000 received five years from today if your investments pay a. 6 percent compounded annually b. 8 percent compounded annually c. 10 percent compounded annually d. 10 percent compounded semiannually e. 10 percent compounded quarterly What do your answers to these questions tell you about the relation between present values and interest rates and between present values and the number of compounding periods per year? (LG 2-9) 23. Calculate the future value in five years of $5,000 received today if your...
Calculate the future value in five years of $5,000 received today if your investments pay a. 6 percent compounded annually b. 8 percent compounded annually c. 9 percent compounded annually d. 9 percent compounded semiannually e. 9 percent compounded quarterly What do your answers to these questions tell you about the relation between future values and interest rates and between future values and the number of compounding periods per year? (LG 2-9)
Calculate the present value of the following annuity streams: a. $4,000 received each year for 5 years on the last day of each year if your investments pay 6 percent compounded annually. b. $4,000 received each quarter for 5 years on the last day of each quarter if your investments pay 6 percent compounded quarterly. c. $4,000 received each year for 5 years on the first day of each year if your investments pay 6 percent compounded annually. d. $4,000...
Calculate the present value of the following annuity streams: a. $5,000 received each year for 4 years on the last day of each year if your investments pay 5 percent compounded annually. b. $5,000 received each quarter for 4 years on the last day of each quarter if your investments pay 5 percent compounded quarterly c. $5,000 received each year for 4 years on the first day of each year if your investments pay 5 percent compounded annually. d. $5,000...
Check my work Calculate the present value of the following annuity streams: a. $5,000 received each year for 6 years on the last day of each year if your investments pay 6 percent compounded annually b. $5,000 received each quarter for 6 years on the last day of each quarter if your investments pay 6 percent compounded quarterly c. $5,000 received each year for 6 years on the first day of each year if your investments pay 6 percent compounded...
show on TVM solver on calculator Calculate the present value of the following annuity streams: a. $4,000 received each year for 4 years on the last day of each year if your investments pay 5 percent compounded annually. b. $4,000 received each quarter for 4 years on the last day of each quarter if your investments pay 5 percent compounded quarterly. c.$4,000 received each year for 4 years on the first day of each year if your investments pay 5...