Question

Problem 4-17 Present Value for Various Compounding Periods Find the present value of $475 due in the future under each of the following conditions. Do not round intermediate calculations. Round your answers to the nearest cent. 4% nominal rate, semiannual compounding, discounted back 5 years $    4% nominal rate, quarterly compounding, discounted back 5 years $    4% nominal rate, monthly compounding, discounted back 1 year $

Answer 1

a.
A	=	P*(1+i)^-n		Where,
	=	475*(1+0.02)^-10		A	Present value
	=	$ 389.67		P	$        475
				i	4%	/	2	=	0.02
				n	5	x	2	=	10
b.
A	=	P*(1+i)^-n		Where,
	=	475*(1+0.01)^-20		A	Present value
	=	$ 389.28		P	$        475
				i	4%	/	4	=	0.01
				n	5	x	4	=	20
c.
A	=	P*(1+i)^-n		Where,
	=	475*(1+0.003333)^-12		A	Present value
	=	$ 456.41		P	$        475
				i	4%	/	12	=	0.003333
				n	1	x	12	=	12