What is the present value of CD with 4% annual interest that matures in 1 year...

What is the present value of CD with 4% annual interest that matures in 1 year with the value of $3000? What is the future value? What factor would determine which value you chose to use?

Expert Solution

Present Value = Future Value / (1 + Interest rate)^time period

Future Value = 3000

Interest rate = 4%

time = 1

therefore, Present Value = 3000/(1.04) = 2884.61

Present value is the value of money that you must invest in order to achieve a specific amount

Future value is the value of money that you would get over a specific period of time

Hence, you choose present value so that you invest an amount right now to achieve a desired amount as per the interest rate.

jeff jeffy answered 2 years ago

What is the present value of $10,000 per year in perpetuity at an annual interest rate of 10 percent if the perpetuity starts in year=4?

What is the present value of $10,000 per year in perpetuity at an annual interest rate of 10 percent if the perpetuity starts in year=4? $10,000 $75,131.48 $1,000 $68,301.35 $82,402.36

Assume a 10% annual interest rate. (i) What is the present value of a 25 year,...

Assume a 10% annual interest rate. (i) What is the present value of a 25 year, $900 annuity if the first payment does not occur until 7 years from today? (ii) What would be the present value of a perpetuity with the same characteristics ($900, first payment in 7 six years).

What is the present value of a $600 perpetuity if the interest rate is 4%? If...

What is the present value of a $600 perpetuity if the interest rate is 4%? If interest rates doubled to 8%, what would its present value be? Round your answers to the nearest cent. -Present value at 4%: $ -Present value at 8%: $

What will be the present value, if $6,800 is discounted back 4 years at an interest...

What will be the present value, if $6,800 is discounted back 4 years at an interest rate of 4% compounded semi-annually?

What’s the interest rate of a 10-year, annual $3,200 annuity with present value of $20,000? (Use...

What’s the interest rate of a 10-year, annual $3,200 annuity with present value of $20,000? (Use a time value of money calculator or a spreadsheet. Round your answer to 2 decimal places.) PVIFA(x% , 6 years) = 20,000/3,200 x = ?

A bond that matures in 13 years has a $1,000 par value. The annual coupon interest...

A bond that matures in 13 years has a $1,000 par value. The annual coupon interest rate is 11 percent and the market's required yield to maturity on a comparable-risk bond is 17 percent. a. What would be the value of this bond if it paid interest annually? b. What would be the value of this bond if it paid interest semiannually?

A callable bond pays annual interest of $5, has a par value of$100, matures in...

A callable bond pays annual interest of $5, has a par value of $100, matures in 10 years but is callable in 4 years at a price of $110, and has a value today of $106. Calculate the yield to call.Group of answer choices5.18%5.27%5.39%5.58%

A callable bond pays annual interest of $5, has a par value of $100, matures in...

A callable bond pays annual interest of $5, has a par value of $100, matures in 10 years but is callable in 5 years at a price of $110, and has a value today of $106. Calculate the yield to call. 5.18% 5.27% 5.39% 5.58%

A bond that matures in 15 years has a $1,000par value. The annual coupon interest rate...

A bond that matures in 15 years has a $1,000par value. The annual coupon interest rate is 12 percent and the market's required yield to maturity on acomparable-risk bond is 14 percent. What would be the value of this bond if it paid interest annually? What would be the value of this bond if it paid interest semiannually?

A bond matures in 8 years, Par value = $1,000, and coupon annual interest payment =...

A bond matures in 8 years, Par value = $1,000, and coupon annual interest payment = $65. Yield to maturity of this bond is 8.2% (yield, or annual return). What is the bond's price? a. $903.04 b. $925.26 c. $948.67 d. $972.84

Question