Question
6. Find the following values. Compounding/discounting occurs annually. Do not round intermediate calculations. Round your answers to the nearest cent. a. An initial $600 compounded
6.
Find the following values. Compounding/discounting occurs annually. Do not round intermediate calculations. Round your answers to the nearest cent.
a. An initial $600 compounded for 10 years at 8%. $
b. An initial $600 compounded for 10 years at 16%. $
c. The present value of $600 due in 10 years at 8%. $
d. The present value of $2,860 due in 10 years at 16% and 8%.
Present value at 16%:
Present value at 8%:
e. Define present value.
1 The present value is the value today of a sum of money to be received in the future and in general is less than the future value.
2 The present value is the value today of a sum of money to be received in the future and in general is greater than the future value.
3 The present value is the value today of a sum of money to be received in the future and in general is equal to the future value.
4 The present value is the value in the future of a sum of money to be received today and in general is less than the future value.
5 The present value is the value in the future of a sum of money to be received today and in general is greater than the future value.
How are present values affected by interest rates?
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