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10 The graph below shows present values and future values of single payments for various interest rates over six periods. Answer the following questions. 10
10 The graph below shows present values and future values of single payments for various interest rates over six periods. Answer the following questions. 10 points Future Value and Present Value of a Single Payment Future $3,500 Values eBook $3,000 References $2,986 $2,500 $2,000 $1,772 $1,500 Present Values $1,340 $1,000 $1,126 $1,000 $500 $0 n=0 1 2 3 4 5 6 +2% -5% -10% -20% Click here to open the graph(s) in a new tab. Requlred: 1. 1. Today (n = 0), a company invests $1,000 and expects that investment to grow 10% each period for the next six periods (n = 6). What is the investment's expected future value? 2. A company expects to receive $1,772 in six periods. What is that amount's present value, assuming the company's other current investment opportunities are expected to earn 10% per period? 3. The difference between the present value and future value for a given rate represents: 4. The difference between present value and future value: The difference between present value and future value: A company has the choice of receiving $1,000 today from a customer or receiving $1,340 in six periods. 6. Which option does the company prefer, assuming the company's other current investment opportunities are expected to earn 5% per period? A company has the choice of receiving $1,000 today from a customer or receiving $1,200 in six periods. 7. Which option does the company prefer, assuming the company's other current investment opportunities are expected to earn 2% per period? 5
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