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Consider a future value of $1,000,7 years in the future. Assume that the nominal interest rate is 12.00%. If you are calculating the present value
Consider a future value of $1,000,7 years in the future. Assume that the nominal interest rate is 12.00%. If you are calculating the present value of this cash flow under semiannual (twice per year) compounding, you would enter for N and for I/Y into your financial calculator. Entering in the values you just calculated for N and I/Y, along with a PMT =0 and a FV=$1,000, into a financial calculator yields a present value of approximately $ with semiannual compounding. If you are calculating the present value of this cash flow under quarterly (four times per year) compounding, you would enter for I/Y into your financial calculator. for N and Entering in the values you just calculated for N and I/Y, along with a PMT =0 and a FV=$1,000, into a financial calculator yields a present value of approximately $ with quarterly compounding. Suppose now that the cash flow of $1,000 only 1 year in the future. If vou are calculating the present value of this cash flow under quarterly (12 times per year) compounding, you would enter for I/Y into your financial calculator. for N and Entering in the values you just calculated for N and I/Y, along with a PMT =0 and a FV=$1,000, into a financial calculator yields a present value of approximately \$ with semiannual compounding. If you are calculating the present value of this cash flow under quarterly (four times per year) compounding, you would enter for I/Y into your financial calculator. for N and Entering in the values you just calculated for N and I/Y, along with a PMT =0 and a FV=$1,000, into a financial calculator vields a present value of approximately \$ with quarterly compounding. Suppose now that the cash flow of $1,000 only 1 year in the future. If you are calculating the present value of this cash flow under quarterly (12 times per year) compounding, you would enter for I/Y into your financial calculator. Entering in the values you just calculated for N and I/Y, along with a PMT =0 and a FV=$1,000, into a financial calculator yields a present value of approximately $ with monthly compounding
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