Current price of coffee = $10 a pound
interest rates are 4%
1). price in 5 years = future value of $10 with interest rate of 4%
So, using FV = PV*(1+r)^t
FV = 10*1.04^5 = $12.17
Price of coffee after 5 years will be $12.17
2). price in 15 years = future value of $10 with interest rate of 4%
So, using FV = PV*(1+r)^t
FV = 10*1.04^15 = $18.01
Price of coffee after 15 years will be $18.01
Problem #5 (TVM-future value): Last year, Tom sold fair trade ground coffee for $10.00 a pound....
Problem #5 (TVM-future value): Last year, Tom sold fair trade ground coffee for $10.00 a pound. If interest rates are 4%, what would be the price of coffee: 1. In 5 years? 2. In 15 years?
Problem #9 (TVM): Tom's accountant suggests that Tom will earn the following cash flow stream from a mutual fund investment over the next 4 years. What is the present value of the following cash flow stream at a rate of 12.00% Years CFs: 0 $0 1 $75 2 $225 3 $0 4 $300 81 Page
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