WOrK Check My Wo Click here to read the eBook: Future Values Click here to read
ID: 2402972 • Letter: W
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 KeyExplanation / Answer
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
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