PROBLEMS
1. Determine the present values (PVs) if $5,000 is received in the future (i.e., at the end of each indicated time period) in each of the following situations:
a. 5 percent for ten years
b. 7 percent for seven years
c. 9 percent for four years
2. Determine the present value (PV) if $15,000 is to be received at the end of eight years and the discount rate is 9 percent. How would your answer change if you had to wait six years to receive the $15,000?
3. Use a financial calculator or computer software program to answer the following questions:
a. What would be the future value (FV) of $15,555 invested now if it earns interest at 14.5 percent for seven years?
b. What would be the FV of $19,378 invested now if the money remains deposited for eight years and the annual interest rate is 18 percent?
4. Use a financial calculator or computer software program to answer the following questions:
a. What is the present value (PV) of $359,000 that is to be received at the end of twenty-three years if the discount rate is 11 percent?
b. How would your answer change in (a) if the $359,000 is to be received at the end of twenty years?
5. Use a financial calculator or computer software program to answer the following questions.
a. What would be the future value (FV) of $19,378 invested now if the money remains deposited for eight years, the annual interest rate is 18 percent, and interest on the investment is compounded semiannually?
b. How would your answer for (a) change if quarterly compounding were used?