Question

WOrK Check My Wo Click here to read the eBook: Future Values Click here to read the eBook: Present Values PRESENT AND FUTURE VALUES FOR DIFFERENT PERIODS Find the following values using the equations and then a financial calculator. Compounding/discounting occurs annually. Do not round intermediate calculations. Round your answers to the nearest cent. a. An initial $600 compounded for 1 year at 10%. b. An initial $600 compounded for 2 years at 10%. C. The present value of $600 due in 1 year at a discount rate of 10%. d. The present value of $600 due in 2 years at a discount rate of 10%. Check My Work Icon Key

Answer 1

1.Compounding of $600 for 1 year at 10%

Future Value = Present Value * (1 + Interest)^years

Future Value = $600 * (1 + 0.10)^1

Future Value = $660

2. Compounding of $600 for 2 years at 10%

Future Value = Present Value * (1 + Interest)^years

Future Value = $600 * (1 + 0.10)^2

Future Value = $726

3.PV of $600 due in one yearat Discount rare of 10%

Present Value = Future Value / (1 + r)^n

Present Value = $600 / (1 + 0.10)^1

Present Value = $545.45

4.PV of $600 due in 2 years at Discount rare of 10%

Present Value = Future Value / (1 + r)^n

Present Value = $600 / (1 + 0.10)^2

Present Value = $495.87