Present value) What is the present value of the following future amounts? a. $90
ID: 2812105 • Letter: P
Question
Present value) What is the present value of the following future amounts? a. $900 to be received 9 years from now discounted back to the present at 9 percent. b. $300 to be received 6 years from now discounted back to the present at 8 percent. c. $1,000 to be received 12 years from now discounted back to the present at 3 percent. d. $1,200 to be received 5 years from now discounted back to the present at 18 percent. a. What is the present value of $900 to be received 9 years from now discounted bagk to the present at 9 percent S(Round to the nearest cent.)Explanation / Answer
a.
rate of interest, r = 9%
Future Cash Flow CF = 900
years after which cash flow occurs n = 9 years
Present value = CF / (1+r)n
= 900/ (1+ 0.09)9
= 900/ 2.172
= $ 414.385
Similary other questions,
b.
r= 8% n= 6 years CF=300
Present Value = 300/(1+0.08)6
= 300/1.587
=$ 189.05
c.
r=3% n=12 CF=1000
Present value = 1000/(1+0.03)12
= 1000/1.426
= $ 701.38
d.
r=18% n=5 years CF=1200
Present Value = 1200/(1+0.18)5
= 1200/2.288
= $ 524.53
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