1. Compute the present value for each of the following situations, assuming a rate of interest of...
Question:
1. Compute the present value for each of the following situations, assuming a rate of interest of 10 percent compounded annually. (Round amounts to the nearest dollar.)
a. A lump-sum payment of $\$ 30,000$ due on a mortgage five years from now
b. A series of payments of $\$ 5,000$ each, due at the end of each year for five years.
c. A 5 -year, $10 \%$ loan of $\$ 25,000$, with interest payable annually, and the principal due in five years.
2. Compute the future value amounts (rounded to the nearest dollar) in each of the following situations:
a. A $\$ 20,000$ lump-sum investment today that will earn interest at $10 \%$ compounded annually over five years.
b. A $\$ 5,000$ lump-sum investment today that will earn interest at $8 \%$, compounded quarterly to provide money for a child's college education 15 years from now.
Step by Step Answer:
Survey Of Accounting
ISBN: 9780538846172
1st Edition
Authors: James D. Stice, W. Steve Albrecht, Earl Kay Stice, K. Fred Skousen