Periods Compound Present Capital Compound Present Amount Worth Sinking Recovery Amount Worth Factor Factor Fund Factor Factor Factor Factor Find F Given Find P Given Find A Given Find A Given Find F Given Find P Given F F A F/P PIF A/F AIP FIA PIA N 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 1.08000 1.16640 1.25971 1.360 1.469 1.587 1.714 1.851 1.999 2.159 2.332 2.518 2.720 2.937 3.172 3.426 3.700 3.996 4.316 4.661 5.034 5.437 5.871 6.341 6.848 7.396 7.988 8.627 9.317 10.063 0.9259 0.8573 0.7938 0.7350 0.6806 0.6302 0.5835 0.5403 0.5002 0.4632 0.4289 0.3971 0.3677 0.3405 0.3152 0.2919 0.2703 0.2502 0.2317 0.2145 0.1987 0.1839 0.1703 0.1577 0.1460 0.1352 0.1252 0.1159 0.1073 0.0994 1.0000 0.4806 0.3080 0.2219 0.1705 0.1363 0.1121 0.0940 0.0001 0.0690 0.0601 0.0527 0.0465 0.0413 0.0368 0.0330 0.0296 0.0267 0.0241 0.0219 0.0198 0.0180 0.0164 0.0150 0.0137 0.0125 0.0114 0.0105 0.0096 0.0088 1.08000 0.56077 0.38803 0.30192 0.25046 0.21632 0.19207 0.17401 0.16008 0.14903 0.14008 0.13270 0.12652 0.12130 0.11683 0.11298 0.10963 0.10670 0.10413 0.10185 0.09983 0.09803 0.09642 0.09498 0.09368 0.09251 0.09145 0.09049 0.08962 0.08883 1.000 2.080 3.246 4.506 5.867 7.336 8.923 10.637 12.488 14.487 16.645 18.977 21.495 24.215 27.152 30.324 33.750 37.450 41.446 45.762 50.423 55.457 60.893 66.765 73.106 79.954 87.351 95.339 103.966 113.283 0.926 1.783 2.577 3.312 3.993 4.623 5.206 5.747 6.247 6.710 7.139 7.536 7.904 8.244 8.559 8.851 9.122 9.372 9.604 9.818 10.017 10.201 10.371 10.529 10.675 10.810 10.935 11.051 11.158 11.258 Present Value and Net Present Value Problem 1 To solve this problem, use the complete 5% Compound Interest Factor Table in this section. a. What is the Present Value (F) of a $1,000 Payment to be Made after 5 Years? P=Fx (Present Value Factor) = $1,000 (0. b. What is the Present Value (F) of a $1,000 Payment to be Made after 10 Years? P=Fx (Present Value Factor) = $1,000 x (O c. What is the Present Value (F) of a $1,000 Payment to be Made after 15 Years? S Notice that the present value of a future payment continually declines as the payment becomes more remote in time. Problem 2 Solving the following problems requires the use of the Compound Interest Factors spreadsheet tool on the Blackboard site. What is the present value (P) of a future payment of $1000 to be made in 30 months at 5% per year. Solve the problem by quarters of the year. 30 months is 10 quarters. a. The interest rate is % per quarter and b. P = $1000 / (1+0.0 2.0 = $ Problem 3 a. What is the present value of a series of 10 annual payments of $1000, assuming a prevailing 5% interest rate? b. What is the present value of a series of 10 semi-annual payments over a period 5 years of $1000, assuming a prevailing 10% interest rate. Semi-annual indicates 2 payments per year, one every six months c. Calculate the present value of the two investments. Investment A yields an annual dividend of $800. Investment B yields a $600 annual dividend and also returns a lump sum of $3000 at the end of year 5. Both investments close out at the end of year 5. Assume a 5% interest rate Investment A: $ Investment B: $ If both investments were offered to you at the same first cost, which is a better deal? A_B