Chegg, this question has already been answered by one of your employees. They di

Question

Chegg, this question has already been answered by one of your employees. They did a great job.

However, for question 1, did the individual use Present Value of a Single Sum or Future Value of a Single Sum? It seemed like he used Present Value of a Single Sum. $15,000 is PV (Present Value), $1,000 is FV (Future Value), 7 years is n (Number of Years), and $20,000 is FV (Future Value). Please let me know if I am correct. Also, I understand that i = 10.16%. Can you please solve the problem completely till you get the answer 10.16% because I have trouble solving for i.

For question 2, can you show the formula that was used. Was it Present Value of a Single Sum, Future Value of a Single Sum, Present Value of an Annuity, or Future Value of an Annuity? Also, is  $10,000 PV (Present Value), is $14,000 FV (Future Value). Can you please solve the problem completely till you get the answer $2,379.71 because like the first one because I have trouble solving for x.

I apologize for being annoying and asking for a lot, but my professor likes work to be shown and organized and clear. I need to answer this question for an take home test. It is very important to me. So if you anyone from Chegg can please help me out to solve this, it would really mean a lot because I don't know who else to ask. Thank you.

Question:

1. We have an investment of $15,000 on which we receive $1,000 yearly, as well as $20,000 7 years later. Compute the i on that investment.

2. We invest $10,000 for 10 years. We receive $14,000 10 years later. The i is 25% annually. What is the annual receipt we make?

Answer 1.

Let interest rate be i%.

Initial Investment is $15,000 on which $1,000 yearly for 7 years and $20,000 after 7 years.

Therefore, 15,000 = 1,000/(1+i) + 1,000/(1+i)^2 + 1,000/(1+i)^3 + .. + 1,000/(1+i)^7 + 20,000/(1+i)^7

i = 10.16%

Answer 2.

Let x be the annual receipt.

Initial Investment is $10,000 and we will receive $14,000 after 10 years interest earned is 25%.

10,000 = x/1.25 + x/1.25^2 + x/1.25^3 + ... + x/1.25^10 + 14,000/1.25^10

8,496.76 = x / 0.25 * (1-(1/1.25)^10)

x = $2,379.71

Explanation / Answer

1. We have an investment of $15,000 on which we receive $1,000 yearly, as well as $20,000 7 years later. Compute the i on that investment.

15000 = 1000*pvifa(i,7) + 2000*pvif(i,7)

The value of 'i' is to be found out by trial and error, so that the PV of the annuity of $1000 and the PV of the 20000 to received at the end of the seventy year = 15000

trying with 10%

PV = 1000*4.8684 + 20000*0.5132 = 4868.4 + 10264 =15132.4

trying with 11%

PV = 1000*4.7122 + 20000*0.4817 = 4712.20 + 9634 = 14346.20

exact rate = 10 + 132.4/786.2 = 10.1687 = 10.17%

2. We invest $10,000 for 10 years. We receive $14,000 10 years later. The i is 25% annually. What is the annual receipt we make?

10000 = A*pvifa(25,10) + 14000*pvif(25,10)

10000 = A*3.5705 + 14000*0.1074; 8496.4 = A*3.5705

A = $2,379.61

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