In: Finance
3. Use both the TVM equations and a financial calculator to find
the following values. (Hint: If you are using a financial
calculator, you can enter the known values and then press the
appropriate key to find the unknown variable. Then, without
clearing the TVM register, you can "override" the variable that
changes by simply entering a new value for it and then pressing the
key for the unknown variable to obtain the second answer. This
procedure can be used in parts b and d, and in many other
situations, to see how changes in input variables affect the output
variable.) Do not round intermediate calculations. Round your
answers to the nearest cent.
a. An initial $400 compounded for 10 years at 4%.
b. An initial $400 compounded for 10 years at 8%.
c. The present value of $400 due in 10 years at a 4% discount rate.
d. The present value of $400 due in 10 years at an 8% discount rate.
a. An initial $400 compounded for 10 years at 4%= $592.10
b. An initial $400 compounded for 10 years at 8%= $863.57
c. The present value of $400 due in 10 years at a 4% discount rate = $270.23
d. The present value of $400 due in 10 years at an 8% discount rate = $185.28
Workings:
(To find the values using financial calculator, please input the values against each of the names given in brackets. 'PMT' for all options, input 0)