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D Sign out xC Chegg Study Guided Solut xs Click here to access MindTé Mind Tap-C .> c secure https://ng m/static/nb/ui/evo/index.htmi?deploymentid-55165167963439393986238818 MIN DTAP Assignment 05-Time Value of Money The process for converting present values into future values is called discountingThis process requires knowledge of the values of three of four time-value-of-money variables. Which of the following is not one of these variables? O The inflation rate indicating the change in average prices O The interest rate (I) that could be earned by invested funds O The duration of the investment (N) O The present value (PV) of the amount invested All other things being equal, the numerical difference between a present and a future value corresponds to the amount of interest earned during the deposit or investment period. Each line on the following graph corresponds to an interest rate: 0%10%, or 19%. Identify the interest rate that corresponds with each line. VALUE (Dollars 0123454791 TIME IYearsl Line A: 0% Line B: Line C: Chapter 14.3 In Cla...dO Blue Region.png

Explanation / Answer

Ans 1) Process of converting present value to future value is called compounding.

Ans 2) option 1 the inflation rate change in the inflation price is wrong.

Asn 3) Line A : 19%

Line B = 10%

Line C = 0%

Ans 4) simple interest and the compound interest

asn 5) Compound interest = PV * (1 + I)^N

Simple Interest = PV + (PV*I*N)

Ans 6) all statements are true

Ans 7) Expected future value of L = 40000 * (1.07)^6 = $60029.21

Expected future value of M = 40000 + 40000*.07*6 = $56800

Expected future value of P = 40000 * 1.11^7 = $83046.41

For P it will be yes.

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