Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hello, I have two similar problems for BUSN602 through AMU. The first is: 1.Compute the present value of a $2,300 deposit in year 1 and

Hello, I have two similar problems for BUSN602 through AMU. The first is: 1.Compute the present value of a $2,300 deposit in year 1 and another $1,800 deposit at the end of year 3 if interest rates are 10 percent.(Do not round intermediate calculations and round your final answer to 2 decimal places.)

The Second question is: Compute the present value of a $4,500 deposit in year 3 and another $4,000 deposit at the end of year 6 using an 9 percent interest rate.(Do not round intermediate calculations and round your final answer to 2 decimal places.)

I know I am using the correct formula because there is a link that takes you to the page of instruction. Can you please tell me if I am missing a step? I'll try to show my work on here the best as possible:

Equation: for question 1:

PV= [2300 / ( 1 + .10)^0] + [1800 / (1 + .10)^2

PV= [2300 / 1] + [1800 / 1.21]

PV= 2300 + 1487.60331

PV = 3787.60331

I rounded to 3787.61, .60, or just 3787 and tried submitting all of those and was told in "check my work" that it was wrong.

For question 2:

PV= [4500 / (1 + .09)^2] + [4000 / (1 + .09)^5]

PV= 4500 / 1.18810 + 4000/1.53862

PV= 3787.55997 + 2599.73223

PV= 6387.29220

Again I've round up or no rounding at all and it's wrong.

Please advise if I am missing something. My understanding of the exponents is if its year 4 I raise the interest calculation to the 3rd, year 5 to the 4th, etc.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Introduction To Finance Markets, Investments, And Financial Management

Authors: Ronald W. Melicher, Edgar A. Norton

17th Edition

1119561175, 978-1119561170

More Books

Students also viewed these Finance questions

Question

Where do the authors work?

Answered: 1 week ago