***Present and future value tables of 1 at 9% are presented below. How much must
ID: 2761440 • Letter: #
Question
***Present and future value tables of 1 at 9% are presented below.
How much must be invested now at 9% interest to accumulate to $10,000 in five years?
***An investment product promises to pay $42,000 at the end of 10 years. If an investor feels this investment should produce a rate of return of 12%,
compounded annually, what's the most the investor should be willing to pay for the investment?
PV of $1 FV of $1 PVA of $1 FVAD of $1 FVA of $1 1 0.91743 1.09000 0.91743 1.0900 1.0000 2 0.84168 1.18810 1.75911 2.2781 2.0900 3 0.77218 1.29503 2.53129 3.5731 3.2781 4 0.70843 1.41158 3.23972 4.9847 4.5731 5 0.64993 1.53862 3.88965 6.5233 5.9847 6 0.59627 1.67710 4.45892 8.2004 7.5233Explanation / Answer
a)Amount to be invested = Future value /FVF@9%,5
= 10000 / 1.53862
= $ 6499.33
2)Amount to pay for investment = Future value *PVF@12%.10
= 42000 * .32197
= $ 13522.88
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