Future Value Compute the future value in year 10 of a $3,000 deposit in year 1 a
ID: 2732151 • Letter: F
Question
Future Value Compute the future value in year 10 of a $3,000 deposit in year 1 and another $4,500 deposit at the end of year 4 using a 10 percent interest rate. Present Value Compute the present value of a $3,000 deposit in year 2 and another $4,500 deposit at the end of year 5 using 6 percent interest rate. Present Value of a Perpetuity What's the present value a bond issued by UK Treasury with par value of 1000 pound, that promised to give investor 50 pounds per year forever, if interest rate is 4 percent? Present Value of an Annuity Due If the present value of an ordinary, 10-year annuity is $10,500 and interest rate is 6.5 percent. What is the present value of the same annuity due? Effective Annual Rate A loan is offered with monthly payments and an 8 percent APR. What's the loan's effective annual rate (EAR)?Explanation / Answer
.1. Future Value = (3000 x 1.1010) + (4500 x 1.106)
= 7781.23 + 7972.02
= $15753.25
2. Present Value = (2000 x PVF@6% for 2nd year) + (4500 x PVF@6% for 5th year)
= 1780+3362.66
= $5142.66
3. Present Value = 50/0.04
= $1250
4. Present Value = 10500 x PVF@6.5% for 10th year
= 10500 x 0.533
= $5596.50
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