FUTURE VALUE of a SUM of money $500 Interest Rate : 500(1+.15)5 5001.014 $1,005.68 PRESENT VALUE of a SUM of money $500 Interest Rate: $500 $500 (1+.10)2 1.21 NET PRESENT VALUE of an invested SUM of money Year \begin{tabular}{ll} & Initial Cost \\ 0 & ($100,000) \\ 1 & \\ 2 & \\ 3 & \end{tabular} Future Cash $40,000$40,000$40,000$120,000 Calculations (40000/1.1) (40000/1.21) (40000/1.331) CLASSROOM ACTIVITY Term: Investment ove You've found an investor for your new business Your investor is looking for a 30% return on their investment The initial investment is $100,000.00 The term is 3 years 1. Determine the Future Cash by Year 2. Do the Calculations 3. Determine Present Value at $30,000 10\% Term: Payback in 2 years NET PRESENT VALUE of an invested SUM of money $413.22 Year Initial Cost Future Cash 0$(100,000.00) 1 2 3 Present Value ($100,000) $36,363.64 $33,057.85 $30,052.59 (\$525.92) Present Value $(100,000.00) $36,363.64 $33,057.85 $30,052.59 $(525.92)