1. The future value of $200 received today and deposited at 8 percent for three years is2. The present value of $100 to be reccived 10 years from today, assuming an opportunitycost of 9 percent, is3. Aunt Tillie has deposited $33,000 today in an account which will earn 10 percentannually. She plans to leave the funds in this account for seven years earning interest. Ifthe goal of this deposit is to cover a future obligation of S65,000, what recommendationwould you make to Aunt Tillie?4. China Manufacturing Agents, Inc. is preparing a five-year plan. Today, sales are$1,000,000. If the growth rate in sales is projected to be 10 percent over the next fiveyears, what will the dollar amount of sales be in year five?5. Dan and Jia are newlyweds and have just purchased a condominium for $70,000. Sincethe condo is very small, they hope to move into a single-family house in 5 years. Howmuch will their condo worth in 5 years if inflation is expected to be 8 percent?You deposit $17,000 each year for 10 years at 7%. Then you earn 9% after that. If youJeave the money invested for another 5 years how much will you have in the 15th year?7. If you depusit $45,000 into an account earning 4% interest compounded quarterly, howmuch would you have in 5 years?8. How much would you pay for an investment which will be worth $16,000 in three years?Assume interest is 5%.9. How much could be earned in an accourit by the end of 5 years if $100,000 is depositedand interest is 4% per year, compounded continuously?10. Suppose you want to have S0.5 million saved by the time you reach age 30, and supposeyou are 20 years old today. If you can earn 5% on your funds, how much you have toinvest today to achieve your goal?11. If I want to withdraw $5000 at the end of 5 years and again $6000 at the end of 6 years,leaving zero balance after my 6h ycar withdrawal. If my funds carm 5% today, how muchshould I deposit today to meet my future withdrawals?

Since you have asked multiple questions, we will solve the first question for you. If you want any…

Answered: 1. The future value of $200 received…

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Finance

1. The future value of $200 received today and deposited at 8 percent for three years is

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 39P

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Concept explainers

Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.

Question

1. The future value of $200 received today and deposited at 8 percent for three years is
2. The present value of $100 to be reccived 10 years from today, assuming an opportunity
cost of 9 percent, is
3. Aunt Tillie has deposited $33,000 today in an account which will earn 10 percent
annually. She plans to leave the funds in this account for seven years earning interest. If
the goal of this deposit is to cover a future obligation of S65,000, what recommendation
would you make to Aunt Tillie?
4. China Manufacturing Agents, Inc. is preparing a five-year plan. Today, sales are
$1,000,000. If the growth rate in sales is projected to be 10 percent over the next five
years, what will the dollar amount of sales be in year five?
5. Dan and Jia are newlyweds and have just purchased a condominium for $70,000. Since
the condo is very small, they hope to move into a single-family house in 5 years. How
much will their condo worth in 5 years if inflation is expected to be 8 percent?
You deposit $17,000 each year for 10 years at 7%. Then you earn 9% after that. If you
Jeave the money invested for another 5 years how much will you have in the 15th year?
7. If you depusit $45,000 into an account earning 4% interest compounded quarterly, how
much would you have in 5 years?
8. How much would you pay for an investment which will be worth $16,000 in three years?
Assume interest is 5%.
9. How much could be earned in an accourit by the end of 5 years if $100,000 is deposited
and interest is 4% per year, compounded continuously?
10. Suppose you want to have S0.5 million saved by the time you reach age 30, and suppose
you are 20 years old today. If you can earn 5% on your funds, how much you have to
invest today to achieve your goal?
11. If I want to withdraw $5000 at the end of 5 years and again $6000 at the end of 6 years,
leaving zero balance after my 6h ycar withdrawal. If my funds carm 5% today, how much
should I deposit today to meet my future withdrawals?

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