To determine the appropriate discount factor(s) using tables, click here to view
ID: 2796686 • Letter: T
Question
To determine the appropriate discount factor(s) using tables, click here to view Tables I, II, III, or IV in the appendix. Alternatively, if you calculate the discount factor(s) using a formula, round to six (6) decimal places before using the factor in the problem. (Round your answers to the nearest dollar amount.)
The future value of $17,000 invested at 6 percent for 11 years.
The future value of eight annual payments of $1,400 at 7 percent interest.
The amount that must be deposited today (present value) at 8 percent to accumulate $35,000 in five years.
The annual payment on a 9-year, 8 percent, $35,000 note payable.
To determine the appropriate discount factor(s) using tables, click here to view Tables I, II, III, or IV in the appendix. Alternatively, if you calculate the discount factor(s) using a formula, round to six (6) decimal places before using the factor in the problem. (Round your answers to the nearest dollar amount.)
Explanation / Answer
a.
PV = FV/(1+r)^n
PV - Present value
FV - Future value
r - Interest rate
n - no. of periods
FV = 17000*(1+0.06)^11 = $32271.08
b.
FV of annuity = P*[((1+r)^n - 1)/r]
P - Periodic payment
r - rate per period
n - number of periods
FV of annuity = 1400*(((1+0.07)^8 - 1)/0.07) = $14363.72
C.
PV = 35000/(1+0.08)^5 = $23820.41
D.
FV of annuity
35000= P*(((1+0.08)^9 - 1)/0.08)
P = $2802.79
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.