In: Finance
Calculate 7 ratios of your choosing
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Show work.
A) Calculate the PV of a single payment of $1,000,000 that you are receive in 5 years and that has an interest rate of 5%.
B) Calculate the PV of a single payment of $21,500,000 that you are receive in 5 years and that has an interest rate of 8%.
C) Calculate the PV of a single payment of $4,000,000 that you are receive in 5 years and that has an interest rate of 12%.
D) Calculate the FV of a single payment of $1,000,000 that you are receive in 5 years and that has an interest rate of 5%.
E) Calculate the FV of a single payment of $21,500,000 that you are receive in 5 years and that has an interest rate of 8%.
F) Calculate the FV of a single payment of $4,000,000 that you are receive in 5 years and that has an interest rate of 12%.
G) Define a lump sum.
H) Define an annuity and give an example.
A)
Present value | FV×(1÷(1+r)^n) | |
Here, | ||
1 | rate per annum | 5.00% |
2 | Number of years | 5 |
3 | Number of compoundings per per annum | 1 |
4 = 1÷3 | rate per period ( r) | 5.00% |
5 = 2×3 | Number of periods (n) | 5 |
Future value (FV) | $ 1,000,000 | |
Present value | $ 783,526.17 | |
1000000*(1/(1+5%)^5) |
B)
Present value | FV×(1÷(1+r)^n) | |
Here, | ||
1 | rate per annum | 8.00% |
2 | Number of years | 5 |
3 | Number of compoundings per per annum | 1 |
4 = 1÷3 | rate per period ( r) | 8.00% |
5 = 2×3 | Number of periods (n) | 5 |
Future value (FV) | $ 21,500,000 | |
Present value | $ 14,632,538.74 | |
21500000*(1/(1+8%)^5) |
C)
Present value | FV×(1÷(1+r)^n) | |
Here, | ||
1 | rate per annum | 12.00% |
2 | Number of years | 5 |
3 | Number of compoundings per per annum | 1 |
4 = 1÷3 | rate per period ( r) | 12.00% |
5 = 2×3 | Number of periods (n) | 5 |
Future value (FV) | $ 4,000,000 | |
Present value | $ 2,269,707.42 | |
4000000*(1/(1+12%)^5) |
D)
Future value | PV×(1+r)^n | |
Here, | ||
1 | Interest rate per annum | 5.00% |
2 | Number of years | 5 |
3 | Number of compoundings per per annum | 1 |
1÷3 | Interest rate per period ( r) | 5.00% |
2×3 | Number of periods (n) | 5 |
Present value (PV) | $ 1,000,000 | |
Future value | $ 1,276,281.56 | |
1000000*(1+5%)^5 |