Question

Please use Question 7 to answer Q7-A, B, and C Present Value

Q-7         You were offered $10,000 every year at the same point in time

for 10 years and you could earn a 5% interest rate every year. The

cash flows would be worth $77,217.30 today.

                                Periodic payment = $10,000                                                

                                Number of payments = 10                                          

                                Interest rate per time period = 5.00%                                   

                                Present Value = $77,217.30

Q7-A.) Of a single amount

From Q7 Determine the present value of a single amount of money to be paid or,

Received in the future, replace the xxx's below.                                                                                

                                                                                                               

Future Payment xxx?                                      

Number of time periods xxx?                                                      

Interest rate per time period xxx?                                                                      

Present Value xxx?

Q7-B.) Of a number of payments that differ in amount

From Q-7 determine the present value of a series of payments that are different in

amount, replace the xxx's with correct numbers below. You can insert

additional payment periods between periods 4 and 5.                                                                                                    

Future Payment 1 xxx?                                                                      

Future Payment 2 xxx?                                                                      

Future Payment 3 xxx?                                                                      

Future Payment 4 xxx?                                                                      

Future Payment 5 xxx?                                                                      

Interest rate per time period xxx?                                                                      

Present Value                                                    #VALUE!?

Q7-C.) Of a number of equal payments

From Q-7 determine the present value of a series of identical payments evenly spaced

over time, replace the xxx's below.                                                                        

Periodic payment xxx?                                                      

Number of payments xxx?                                                      

Interest rate per time period xxx?                                                                      

Present Value xxx?

Answer 1

7a)Future payment=10000(assumption)
No of time periods=10
Interest rate =5%
Present value=
use pv formuale in excel
=pv(rate,nper,pmt,fv,type)
=pv(5%,10,0,10000,0)=61,39.13

7b)
Future payment 1 =10000
Future payment 2 =20000
Future payment 3 =30000
Future payment 4 =40000
Future payment 5 =50000
interest rate=5%
present value=
=(10000/1.05^1)+(20000/1.05^2)+310000/1.05^3)+(40000/1.05^4)+(50000/1.05^5)=125,663.93

7c)
Periodic payment   =10000                                                  
Number of payments   =5                              
Interest rate per time period=5%                                                                  
Present Value=
=pv(5%,5,10000,0,0)= 43,294.77