Question

Calculate the present value of $5,000 received five years from today if your investments pay (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) Present Value a. 6 percent compounded annually $ b. 8 percent compounded annually c. 10 percent compounded annually d. 10 percent compounded semiannually e. 10 percent compounded quarterly

Answer 1

Present Value

=

Future Value *(1+i)^-n

Where,

i

=

Investment return

n

=

life

a.

Present Value

=

Future Value *(1+i)^-n

Where,

=

5000*(1+0.06)^-5

i

=

6%

=

$ 3,736.29

n

=

5

Future Value

=

$    5,000

b.

Present Value

=

Future Value *(1+i)^-n

Where,

=

5000*(1+0.08)^-5

i

=

8%

=

$ 3,402.92

n

=

5

Future Value

=

$    5,000

c.

Present Value

=

Future Value *(1+i)^-n

Where,

=

5000*(1+0.10)^-5

i

=

10%

=

$ 3,104.61

n

=

5

Future Value

=

$    5,000

d.

Present Value

=

Future Value *(1+i)^-n

Where,

=

5000*(1+0.05)^-10

i

=

10%

/2

=

5%

=

$ 3,069.57

n

=

5

*2

=

10

Future Value

=

$    5,000

e.

Present Value

=

Future Value *(1+i)^-n

Where,

=

5000*(1+0.025)^-20

i

=

10%

/4

=

2.5%

=

$ 3,051.35

n

=

5

*4

=

20

Future Value

=

$    5,000