Suppose you receive $100 at the end of each year for the next three years. a. If the interest rate is 8%, what is the present value of these cash flows? b. What is the future value in three years of the present value you computed in (a)? c. Suppose you deposit the cash flows in a bank account that pays 8% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)? How does the final bank balance compare with your answer in (b)? a. If the interest rate is 8%, what is the present value these cash flows? The present value of these cash flows is $. (Round to the nearest cent.) b. What is the future value in three years of the present value you computed in (a)? The future value in three years is $. (Round to the nearest cent.) c. Suppose you deposit the cash flows in a bank account that pays 8% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)? The balance in the account at the end of year one is $. (Round to the nearest cent.) The balance in the account at the end of year two is $. (Round to the nearest cent.) The balance in the account at the end of year three is $. (Round to the nearest cent.) How does the final bank balance compare with your answer in (b)? (Select from the drop-down menu and ignore small differences due to rounding.) The final bank balance in (c) is v the bank balance from part (b).
Suppose you receive $100 at the end of each year for the next three years. a. If the interest rate is 8%, what is the present value of these cash flows? b. What is the future value in three years of the present value you computed in (a)? c. Suppose you deposit the cash flows in a bank account that pays 8% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)? How does the final bank balance compare with your answer in (b)? a. If the interest rate is 8%, what is the present value these cash flows? The present value of these cash flows is $. (Round to the nearest cent.) b. What is the future value in three years of the present value you computed in (a)? The future value in three years is $. (Round to the nearest cent.) c. Suppose you deposit the cash flows in a bank account that pays 8% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)? The balance in the account at the end of year one is $. (Round to the nearest cent.) The balance in the account at the end of year two is $. (Round to the nearest cent.) The balance in the account at the end of year three is $. (Round to the nearest cent.) How does the final bank balance compare with your answer in (b)? (Select from the drop-down menu and ignore small differences due to rounding.) The final bank balance in (c) is v the bank balance from part (b).
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter4: Managing Your Cash And Savings
Section: Chapter Questions
Problem 7FPE: Calculating interest earned and future value of savings account. If you put 6,000 in a savings...
Related questions
Question
Transcribed Image Text:Suppose you receive $100 at the end of each year for the next three years.
a. If the interest rate is 8%, what is the present value of these cash flows?
b. What is the future value in three years of the present value you computed in (a)?
c. Suppose you deposit the cash flows in a bank account that pays 8% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)? How does the final bank balance compare with
your answer in (b)?
a. If the interest rate is 8%, what is the present value of these cash flows?
The present value of these cash flows is $ |. (Round to the nearest cent.)
b. What is the future value in three years of the present value you computed in (a)?
The future value in three years is $
(Round to the nearest cent.)
c. Suppose you deposit the cash flows in a bank account that pays 8% interest per year. What is the balance in the account at the end of each of the next three years (after your deposit is made)?
The balance in the account at the end of year one is $
(Round to the nearest cent.)
The balance in the account at the end of year two is $
(Round to the nearest cent.)
The balance in the account at the end of year three is $
(Round to the nearest cent.)
How does the final bank balance compare with your answer in (b)? (Select from the drop-down menu and ignore small differences due to rounding.)
The final bank balance in (c) is
the bank balance from part (b).
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.Recommended textbooks for you
Pfin (with Mindtap, 1 Term Printed Access Card) (…
Finance
ISBN:
9780357033609
Author:
Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:
Cengage Learning
Pfin (with Mindtap, 1 Term Printed Access Card) (…
Finance
ISBN:
9780357033609
Author:
Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:
Cengage Learning
Principles of Accounting Volume 2
Accounting
ISBN:
9781947172609
Author:
OpenStax
Publisher:
OpenStax College
Intermediate Accounting: Reporting And Analysis
Accounting
ISBN:
9781337788281
Author:
James M. Wahlen, Jefferson P. Jones, Donald Pagach
Publisher:
Cengage Learning
