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Suppose you receive $130 at the end of each year for the next three years. a. If the interest rate is 8%, what is the
Suppose you receive $130 at the end of each year for the next three years. a. If the interest rate is 8%, what is the present value of these cash flows? b. What is the future value in three years of the present value you computed in (a)? c. Suppose you deposit the cash flows in a bank account that pays 8% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)? How does the final bank balance compare with your answer in (b)? a. If the interest rate is 8%, what the present value of these cash flows? The present value of these cash flows is $ (Round to the nearest cent.) b. What is the future value in three years of the present value you computed in (a)? The future value in three years is $ (Round to the nearest cent.) c. Suppose you deposit the cash flows in a bank account that pays 8% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)? The balance in the account at the end of year one is $ . (Round to the nearest cent.) The balance in the account at the end of year two is $ . (Round to the nearest cent.) The balance in the account at the end of year three is $. (Round to the nearest cent.) How does the final bank balance compare with your answer in (b)? (Select from the drop-down menu and ignore small differences due to rounding.) The final bank balance in (c) is the bank balance from part (b)
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