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eBook Problem Walk-Through Find the present value of $500 due in the future under each of these conditions: a. 6% nominal rat
Different compounding periods, to diferent types of ents. In order to properly compare investments or loans with Sofference b
can you pleas answe this two question please
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Answer #1
FV = Future Value
PV = Present Value
r = rate of interest
n= no of period
a) PV = FV/ (1 + r )^n
PV = 500 / ((1 + 6%/2)^10)
PV = 372.05
b) PV = FV/ (1 + r )^n
PV = 500 / ((1 + 6%/4)^20)
PV = 371.24
c) PV = FV/ (1 + r )^n
PV = 500 / ((1 + 6%/12)^12)
PV = 470.95
d) The present value declines as periods per year increases
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