a. What is the present value of $30,000 received 5 years from now? Assume a rate...

a. What is the present value of $30,000 received 5 years from now? Assume a rate of 6%?

b. To what value would $30,000 grow, compounded annually in 5 years assuming a discount rate of 4%?

Solutions

Expert Solution

a. The present value is computed as follows:

= Future value / (1 + r)ⁿ

= $ 30,000 / 1.06⁵

= $ 22,417.75

b. The value is computed as follows:

= Present value x (1 + r)ⁿ

= $ 30,000 x 1.04⁵

= $ 36,499.59

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

1. What is the present value of $679.6 to be received 5 years from now if...

1. What is the present value of $679.6 to be received 5 years from now if the discount rate is 20% per year and the discounting period is annual? 2. What present amount is equivalent to $99 received at the end of 5 years, given an opportunity cost of 16%? 3. What amount received at the end of 15 years is equivalent to $96 received at the end of each year for 15 years, given an opportunity cost of 12%?...

The present value of $20,000 to be received in 5 years at an interest rate of...

The present value of $20,000 to be received in 5 years at an interest rate of 16%, compounded annually, is $9,522.Required:Using a present value table (Table 6-4 and Table 6-5), calculate the present value of $20,000 for each of the following items (parts a—f) using these facts: (Use the appropriate value(s) from the tables provided. Round your PV factors to 4 decimal places and final answers to the nearest whole dollar.)a. Interest is compounded semiannually. b. Interest is compounded quarterly....

a. What is the present value (PV) of $70,000 received six years from now, assuming the...

a. What is the present value (PV) of $70,000 received six years from now, assuming the interest rate is 4% per year? a. $47,024 b. $45,500 c. $96,814 d. $55,322 b. Convex Industries has inventories of $212 million, current assets of $1.20 billion, and current liabilities of $528 million. What is its quick ratio? a. 1.87 b. 2.25 c.0.94 d.0.75

a. What is the present value (PV) of $60,000 received thirty years from now, assuming the...

a. What is the present value (PV) of $60,000 received thirty years from now, assuming the interest rate is 6% per year? a. 10,447 b.8880 c. 18,282 d. 39,000 b. If $546 invested today yields $600 in one year's time, what is the discount factor? a. 1.91 b. 0.09 c. 1.82 d. 0.91 c. If the one-year discount factor is equal to 0.95238, the interest must be equal to: a.5.0% b. 4.5% c.2.5% d.4.0%

What is the net present value of receiving $250 in 5 years from now if the...

What is the net present value of receiving $250 in 5 years from now if the interest rate is 11%?

What is the present value of 500,000 fifteen years from now at a 4% interest rate...

What is the present value of 500,000 fifteen years from now at a 4% interest rate with exponential discounting? With hyperbolic discounting? When would you choose to use hyperbolic discounting instead of exponential discounting?

Present Value 6a. What is the present value of $1,000,000, due 25 years from now? ...

Present Value 6a. What is the present value of $1,000,000, due 25 years from now? b. What is the present value of a $40,000 ordinary annuity for 25 years? c. What is the present value of a $40,000 perpetuity, if the first payment is 1 year from now? d. What is the present value of a $40,000 perpetuity, if the first payment is now? Using formula or Excel function

1. What is the present value of $160,000 to be received in 9 years from today?...

1. What is the present value of $160,000 to be received in 9 years from today? Assume a per annum discount rate of 9%, compounded annually. (Round to the nearest penny, e.g. 1234.56) Answer: 2. You just purchased a parcel of land for $73,000. To earn a 14% annual rate of return on your investment, how much must you sell the land for in 5 years? Assume annual compounding. (Round to the nearest penny, e.g. 1234.56) Answer: Earnest T needs...

Assume the appropriate discount rate is 5%. What is the value 4 years from today of...

Assume the appropriate discount rate is 5%. What is the value 4 years from today of an annuity that makes payments of $2,000 per year if the first payment is made 5 years from now and the last payment is made 9 years from now?

Assume the appropriate discount rate is 5%. What is the value 4 years from today of...

Subjects