Question
Time Value of Money: Basics Using the equations and tables in Appendix 24A of this chapter, determine the answers to each of the following independent
Time Value of Money: Basics Using the equations and tables in Appendix 24A of this chapter, determine the answers to each of the following independent situations: Round all answers to the nearest whole number. a. The future value in three years of $8,900 invested today in a certificate of deposit with interest compounded annually at 6%. $ 10,600 b. The present value of $12,000 to be received in five years, discounted at 6%. $ 8,967 c. The present value of an annuity of $25,000 per year for four years discounted at 8%. $ 82,803 d. An initial investment of $66,200 is to be returned in six equal annual payments. Determine the amount of each payment if the interest rate is 10%. $ 15,200 e. A proposed investment will provide cash flows of $10,000, $7,500, and $5,000 at the end of Years 1, 2, and 3, respectively. Using a discount rate of 14%, determine the present value of these cash flows. Year 1 $ Year 2 Year 3 Total $ Present Value 8,771 x 5,771 3,374 x 17,918 f. Find the present value of an investment that will pay $15,000 at the end of Years 8, 9, and 10. Use a discount rate of 16%. $ 11,920
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