Calculate the present value of each of the following future payments a. A $10,00

Question

Calculate the present value of each of the following future payments

a. A $10,000 lump sum received 1 year from now if the market interest rate is 8 percent.
b. A $10,000 lump sum received 2 years from now if the market interest rate is 10 percent.
c. A $1,000 lump sum received 3 years from now if the market interest rate is 5 percent.
d. A $25,000 lump sum received one year from now if the market interest rate is 12 percent.
e. A $25,000 lump sum received one year from now if the market interest rate is 10 percent.
f. A perpetuity of $500 per year if the market rate of interest is 6 percent.

Explanation / Answer

a. $9,259.26 (10,000/(1+.08)) b. $8,264.26 (10,000/(1+.10)2) c. $863.84 (1,000/(1+.05)3) d. $22,321.43 (25,000/(1+.12)) e. $22,727.27 (25,000/(1+.10)) f. $8,333.33 (500/.06

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