Question

How much would you have to invest today to receive the following? Use Appendix B and Appendix D for an approximate answer, but calculate your final answer using the formula and financial calculator methods.

a. $13,600 in 11 years at 8 percent. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

b. $17,500 in 17 years at 13 percent. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

c. $7,000 each year for 20 years at 8 percent. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

d. $47,000 each year for 50 years at 17 percent. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Answer 1

Calculating the amount to be Invested Today:-

a).

where, Future Value = $13,600

r = Interest rate = 8%

n = no f periods = 11

Present Value = $5832.81

So, Amount to be Invested today is $5832.81

b).

where, Future Value = $17,500

r = Interest rate = 13%

n = no f periods = 17

Present Value = $2191.31

So, Amount to be Invested today is $2191.31

c).

Where, C= Periodic Payments = $7000

r = Periodic Interest rate =8%

n= no of periods = 20

Present Value = $68,727.03

d).

Where, C= Periodic Payments = $47000

r = Periodic Interest rate =17%

n= no of periods =

Present Value = $276,362.85

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