Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 15% 0 1.00000 1.00000 1.00000 1.00000 1.00

Question

Periods 4% 5% 6% 7% 8% 9% 10% 11% 12% 15%

0 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000 1.00000

1 1.04000 1.05000 1.06000 1.07000 1.08000 1.09000 1.10000 1.11000 1.12000 1.15000

2 1.08160 1.10250 1.12360 1.14490 1.16640 1.18810 1.21000 1.23210 1.25440 1.32250

3 1.12486 1.15763 1.19102 1.22504 1.25971 1.29503 1.33100 1.36763 1.40493 1.52088

4 1.16986 1.21551 1.26248 1.31080 1.36049 1.41158 1.46410 1.51807 1.57352 1.74901

5 1.21665 1.27628 1.33823 1.40255 1.46933 1.53862 1.61051 1.68506 1.76234 2.01136

6 1.26532 1.34010 1.41852 1.50073 1.58687 1.67710 1.77156 1.87041 1.97382 2.31306

7 1.31593 1.40710 1.50363 1.60578 1.71382 1.82804 1.94872 2.07616 2.21068 2.66002

8 1.36857 1.47746 1.59385 1.71819 1.85093 1.99256 2.14359 2.30454 2.47596 3.05902

9 1.42331 1.55133 1.68948 1.83846 1.99900 2.17189 2.35795 2.55803 2.77308 3.51788

10 1.48024 1.62889 1.79085 1.96715 2.15892 2.36736 2.59374 2.83942 3.10585 4.04556

11 1.53945 1.71034 1.89830 2.10485 2.33164 2.58043 2.85312 3.15176 3.47855 4.65239

12 1.60103 1.79586 2.01220 2.25219 2.51817 2.81267 3.13843 3.49845 3.89598 5.35025

13 1.66507 1.88565 2.13293 2.40985 2.71962 3.06581 3.45227 3.88328 4.36349 6.15279

14 1.73168 1.97993 2.26090 2.57853 2.93719 3.34173 3.79750 4.31044 4.88711 7.07571

15 1.80094 2.07893 2.39656 2.75903 3.17217 3.64248 4.17725 4.78459 5.47357 8.13706

16 1.87298 2.18287 2.54035 2.95216 3.42594 3.97031 4.59497 5.31089 6.13039 9.35762

17 1.94790 2.29202 2.69277 3.15882 3.70002 4.32763 5.05447 5.89509 6.86604 10.76126

18 2.02582 2.40662 2.85434 3.37993 3.99602 4.71712 5.55992 6.54355 7.68997 12.37545

19 2.10685 2.52695 3.02560 3.61653 4.31570 5.14166 6.11591 7.26334 8.61276 14.23177

20 2.19112 2.65330 3.20714 3.86968 4.66096 5.60441 6.72750 8.06231 9.64629 16.36654

1.What is the present value of $32,500 due 11 periods from now, discounted at 12%?

2.What is the present value of $32,500 to be received at the end of each of 12 periods, discounted at 6%?

3.Elmdale Company is considering an investment that will return a lump sum of $769,700, 7 years from now. What amount should Elmdale Company pay for this investment to earn a 12% return?

4.Orear Company earns 8% on an investment that will return $454,600, 10 years from now. What is the amount Orear should invest now to earn this rate of return?

5. Dayton Company is considering investing in an annuity contract that will return $31,700 annually at the end of each year for 15 years.
What amount should Dayton Company pay for this investment if it earns a 10% return?

6. Nolasko Enterprises earns 4% on an investment that pays back $95,400 at the end of each of the next 4 years. What is the amount Nolasko Enterprises invested to earn the 4% rate of return?

7. Robertson Company receives a $78,900, 4-year note bearing interest of 9% (paid annually) from a customer at a time when the discount rate is 8%.
What is the present value of the note received by Robertson?

Explanation / Answer

1 present value of $32,500 due 11 periods from now, discounted at 12% = $32500/(1+i)^n = $32500/(1+.12)^11 = 9342.973383 $ 2 present value of $32,500 to be received at the end of each of 12 periods, discounted at 6%? = $32500/sum of (1+1)^n = 32500/sum(1.06)^12 = 272474.9281 $ 3 Amount to be invested to receive lumpsum of Rs 769700 at the end of 7 yrs @ 12% = Lum sum amount to be received after 7 yrs P.V Factor for 12% at the end of 7 yrs = $769,700 2.21068 = 34817.34127 $ 4 Amount to be invested to receive lumpsum of $454600 at the end of 10 yrs @ 8% = Lum sum amount to be received after 10 yrs P.V Factor for 8% at the end of 10 yrs = $454,600 2.15892 = 210568.2471 $

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