7. polynomial roots Return to the cash flow sequence in Table 12.1. Write out the equation for the present value, as a function of r. Multiply both sides by

(1 + r)6, as we did in the text. Notice this gives you the equivalent, or future, value at the end of time t = 6. Naturally, if the future value is zero the present value is zero.

(a) Determine the future value, assuming (1 + r) = 1.14131679.

Interpret the result.

(b) Determine the future value, assuming (1 + r) = −0.02681697.
Interpret the result.