Question

Page 9 of 22 which of the fo will be received he following is the formula for finding the present value of an amount M that received one year from now, when the interest rate is R? dosso M*(1 + R/100) MX (1+R) M/(1 + R) M/R M/(100R) 19. Your uncle wants to help you with your college expenses, and he promised to pay you $10,000 next year and $15,000 in two years. The current interest rate is 6%, and you expect that this interest rate will be the same for the next year and will increase to 8% i the year after. What formula should you use to compute the present discounted value your uncle's contribution to your education expenses? a. 0 + 10,000+ 15,000 10,000/(1.06) + 15,000/((1.06)(1.06)) 10,000/(1.06) + 15,000/((1.06)(1.08)) 10,000/(1.06) + 15,000/((1.08)(1.08)) 11. Vour firm's profits

answer both

Answer 1

Which of the following is the formula for finding the present value of an amount M that will be received one year from now when the interest rate is R?

Answer: C. M/(1+R)

we know the formula of present value(PV) is:

PV= Future value/ (1+rate of interest)^n

Where future value= M

rate of interest = R

number of period= 1 year

Hence present value= M/(1+R)

19. Your uncle wants to help you with your college expenses, and he promised to pay you $10000 next year and $15000 in two years. The current interest rate is 6% and you expect this interest rate will be the same for the next year and will increase to 8% in the year after. What formula should you use to compute present discounted value of your uncle's contribution to your education expenses?

Answer: C. 10000/(1.06) +15000/ ((1.06)(1.08))