Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 1P
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Question
Complete the table below giving the principal PP that must be invested at interest rate 5 % compounded weekly to obtain a balance of AA = $ 150000 in tt years
Expert Solution
Step 1
Time value of money (TVM ) means that the money received today will have more than the money received in the future. It is based on the concept that the earlier receipts are worth more than the later receipts. The process of finding the present value using the future value, compounding periods and the interest rate is called discounting.
Where,
PV = Present value or Principal deposit
FV = Future value
n = Number of compounding period
r = Interest rate
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