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1. a. Present value What is the present value of a security that will pay $9000 in 20 years if securities of equal risk pay

1.

a. Present value

What is the present value of a security that will pay $9000 in 20 years if securities of equal risk pay 8% annually? Round your answer to the nearest cent. $________

Present and future values for different periods

Find the following values using the equations and then a financial calculator. Compounding/discounting occurs annually. Round your answers to the nearest cent.

b. An initial $400 compounded for 1 year at 8%.

$_____

c. An initial $400 compounded for 2 years at 8%.

$_____

d. The present value of $400 due in 1 year at a discount rate of 8%.

$_____

e. The present value of $400 due in 2 years at a discount rate of 8%.

$______

f. Time for a lump sum to double

If you deposit money today in an account that pays 14% annual interest, how long will it take to double your money? Round your answer to two decimal places. _______years

Future value: annuity versus annuity due

g. What's the future value of a 12%, 5-year ordinary annuity that pays $600 each year? Round your answer to the nearest cent.

$_______

h. If this was an annuity due, what would its future value be? Round your answer to the nearest cent.

$_______

Time for a lump sum to double

How long will it take $600 to double if it earns the following rates? Compounding occurs once a year. Round each answer to two decimal places.

i. 7%

________year(s)

j. 11%.

________year(s)

k. 17%,

________year(s)

l. 100%.

________year(s)

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