Find the following values, using the equations, and then work the problems using

ID: 2612874 • Letter: F

Question

Find the following values, using the equations, and then work the problems using a

financial calculator to check your answers. Disregard rounding differences. (Hint: If you

are using a financial calculator, you can enter the known values and then press the

appropriate key to find the unknown variable. Then, without clearing the TVM register,

you can “override” the variable that changes by simply entering a new value for it and

then pressing the key for the unknown variable to obtain the second answer. This

procedure can be used in parts b and d, and in many other situations, to see how changes

in input variables affect the output variable.)

a. An initial $500 compounded for 1 year at 6%

b. An initial $500 compounded for 2 years at 6%

c. The present value of $500 due in 1 year at a discount rate of 6%

d. The present value of $500 due in 2 years at a discount rate of 6%

PLEASE SHOW WORK

Future value = present value *FVF@6%,1year

= 500 * 1.06

= 530

2)Future vale = present value *FVF@6%,2years

= 500 * 1.1236

= $ 561.80

3)Present value =future value *PVF@6%,1year

= 500 * .94340

= 471.70

4)present value = future value *PVF@6%,2years

= 500 *.89000

= $ 445

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