Question

Time Value of Money: Basics Using the equations and tables in Appendix 12A of this chapter, determine the answers to each of the following independent situations: Round all answers to the nearest whole number. a. The future value in two years of $11,500 invested today in a certificate of deposit with interest compounded annually at 10 percent. b. The present value of $13,000 to be received in five years, discounted at 8 percent c. The present value of an annuity of $26,500 per year for four years discounted at 12 percent. d. An initial investment of $48,220 is to be returned in six equal annual payments. Determine the amount of each payment if the interest rate is 16 percent. e. A proposed investment will provide cash flows of $13,000, 16,000 and $14,000 at the end of Years 1,2 and 3, respectively. Using a discount rate of 16 percent, determine the present value of these cash flows. Present Value Year 1 Year 2 Year 3 otal S f. Find the present value of an investment that will pay $13,000 at the end of Years 8, 9, and 10. Use a discount rate of 12 percent.

Answer 1

Future value : ρ.vĆty o) Future Value - S1soo ( to)* Present Vatue Fv $ 13000 $8848. ~ O 12 dl) 0.16 3-68 u1

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