Find the present value of $500 duein the future under each of these conditions:a. 12% nominal rate, semiannual compounding, discounted back 5 yearsb. 12% nominal rate, quarterly compounding, discounted back 5 yearsc. 12% nominal rate, monthly compounding, discounted back 1 yeard. Why do the differences in the PVs occur?

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A: Annual withdrawal (P) = $ 1500 Number of annual payment (n) = 25 Annual interest rate (r) = 10%

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A:

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Q: Find the present value of $500 due in the future under each of these conditions: 12% nominal rate,…

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A: A. Future value = Amount*(1+rate)^years Future value = $500*(1+6%)^1 Future value = $500 * 1.06…

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Q: The present sum needed to provide for an annual withdrawal of $1,500 for 25 years beginning 5 years…

A: Annual withdrawal (P) = $ 1500 Number of annual withdrawal (n) = 25 First payment (t) = 5 years…

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A: present value of the obligations = 3000/1.056  + 5000/1.0510 = 5308.21

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A: Present value is the worth of the amount in present times that is expected to be received in future…

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A: Present Value is the current value of the future sum of money at the specific rate of return.

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Q: What's the present value of $4,500 discounted back 5 years if the appropriate interest rate is 4.5%,…

A: Future value=$4500Interest rate=4.5%Number of componding per year=2Time=5

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.