Answer the following time value of money questions assuming the interest rate is 8 percent. a. What
Question:
Answer the following time value of money questions assuming the interest rate is 8 percent.
a. What is the present value of $1,000 to be received in four years?
b. What is the present value of $1,000 to be received in eight years? Why does the present value fall as the number of years increases?
c. What will be the value in seven years of $12,000 invested today?
d. How much would you pay for the right to receive $5,000 at the end of year 1, $4,000 at the end of year 2, and $8,000 at the end of year 5?
e. How long will it take for a $2,000 investment to double in value?
f. What will be the value in 20 years of $1,000 invested at the end of each year for the next 20 years? LO.1
Step by Step Answer:
Analysis For Financial Management
ISBN: 9781260772364
13th Edition
Authors: Robert Higgins, Jennifer Koski, Todd Mitton