Safari File Edit View History Bookmarks Window o d The pesent value of S40,000 t

Question

Safari File Edit View History Bookmarks Window o d The pesent value of S40,000 to be received in 5 years at an rtenst rate of 16%, oorpanded annally's S19045 Required: Using a present value table CTable 6-4 and Table 6-5),calculate the present value of $40,000 for each of the following items (parts a-0 using these facts: (Use appropriate factorie) from the tables provided b. Interest is compounded quarterly .Adscont rate of 14% is used. dAdiscount rate of 20% is used The cash will be received in 3 years

Explanation / Answer

PV = 19045; FV = 40000; No of periods = 5; Rate= 16

PV = CF1 / (1+r)n

a) Interest semiannually -

FV = 40000; N = 5*2 = 10; R= 16/2 = 8

PV = 18527

b) Interest quaterly -

FV = 40000; N = 5*4 = 20; R= 16/4 = 4

PV = 18255

c) FV = 40000; No of periods = 5; Rate= 14

PV = 20774

c) FV = 40000; No of periods = 5; Rate= 20

PV = 16075

d) FV = 40000; No of periods = 3; Rate= 16

PV = 25626

e) FV = 40000; No of periods = 7; Rate= 16

PV = 14153

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