Question

x Incorrect. What is the present value of $8,000 received in 7 years at 8% interest? (Round answer to O decimal places.) Present value x] Incorrect. Bonnie Lee buys a savings bond for $125. The bond pays 5% and matures in 10 years. What amount will Bonnie receive when she redeems the bond? (Round answer to 2 decimal places.) Future value x Incorrect. Erik Peterson needs to have $10,000 at the end of 5 years to purchase a second car. His investment returns 6%. How much does he need to invest now? (Round answer to O decimal places.) Investment amount Incorrect. Conan Bardwell will receive $1,000 in 6 years from an investment that returns 12%. How much did he invest? (Round answer to O decimal places.) X Investment amount

Answer 1

1)Present value =PVF8%,7*Future value

           = .58349* 8000

            = $ 4667.92 (rounded to 4668)

*Find PVF using the formula 1/(1+i)^n where i= 8% ,n=7

2)Future value =Present value (1+i)^n

             = 125 (1+ .06)^10

            = 125 * 1.79085

           = 223.86

3)

Amount to invest now =Future value of car *PVF6%,5

              = 10000 * .74726

               = $ 7472.6 (rounded to 7473 )

*Find PVF using the formula 1/(1+i)^n where i= 6% ,n=5

4)

Amount to invest now =Future value of car *PVF12%,6

              = 1000 *.50663

               = $ 506.63 (rounded to 507)

*Find PVF using the formula 1/(1+i)^n where i= 12% ,n=6