How much would you need to invest today to have: a $12,000 in 6 years if the int

Question

How much would you need to invest today to have:

a $12,000 in 6 years if the interest rate is 12%

b $15,000 in 15 years if the interest rate is 8%

c $5,000 each year for 10 years if the interest rate is 8 receive % ( end of period payment).

d $5,000 each year for 10 years if the interest rate is 8% ( beginning of period payment).

e $50,000 each year for 10 years if the interest rate is 8% ( end of period payment).

f. $50,000 each year for 10 years if the interest rate is 8% ( beginning of period payment).

Explanation / Answer

present value = future value /(1+r)^n

a)

=>

present value = 12000/(1+12%)^6 = 6079.57

b)

present value = 15000/(1+8%)^15 = 4728.63

c)

present value of annuity = c * [1- (1+i)^-n]/i

=>

present value = 5000 * [1- (1+8%)^-10]/8% = 33550.41

d)

present value of annutiy due =  c * [1- (1+i)^-n]/i * (1+i)

present value = 5000 * [1- (1+8%)^-10]/8% * (1+8%) = 36234.44

similarly calculate e and f

Related Questions

Navigate

• Browse (All)
• Browse H
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.