Determine the following present values:
$10,000 received at the end of 13 years; I = 10%
$800 received at the end of each of the next 11 years; I = 14%
$300 received at the beginning of each of the next 4 years I = 12%
ANSWER:
1) I = 10% AND N = 13 YEARS AND FV = 10,000
PV = FV(P/F,I,N)
PV = 10,000(P/F,10%,13)
PV = 10,000 * 0.2897
PV = 2,897
2) I = 14% AND N = 11 YEARS AND ANNUAL PAYMENT RECIEVED = 800
PV = ANNUAL PAYMENT RECIEVED(P/A,I,N)
PV = 800(P/A,14%,11)
PV = 800 * 5.453
PV = 4,362.4
3) I = 12% AND N = 3 YEARS (BECAUSE PAYMENTS ARE MADE AT THE START OF THE YEAR AND HENCE THE FIRST PAYMENT WILL BE IN YEAR 0) AND ANNUAL PAYMENT RECIEVED = 300
PV = CASH FLOW IN YEAR 0 + ANNUAL PAYMENTS RECIEVED(P/A,I,N)
PV = 300 + 300(P/A,12%,3)
PV = 300 + 300 * 2.402
PV = 300 + 720.6
PV = 1,020.6
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