How much would you have to invest today to receive: Use Appendix B and Appendix

Question

How much would you have to invest today to receive: Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods. $15,000 in 8 years at 10 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places). $20,000 in 12 years at 13 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) $6,000 each year for 10 years at 9 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) $50,000 each year for 50 years at 7 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Explanation / Answer

Calculate present values in an excel sheet using the formulae as follows

a. =PV(10%,8,0,-15000,0) = $ 6,997.61

b. =PV(13%,12,0,-20000,0) = $ 4,614.12

c. =PV(9%,10,-6000,0,0) = $38,505.95

d. =PV(7%,50,-50000,0,0) = $ 690,037.31

Please observe carefully the values entered in problems a and b are different from c and d. This difference is because of in a and b, amount is received in one shot where as in c and d, amount is received each year.

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