Tommy John is going to receive $370,000 in three years. The current market rate of interest is 7%. a. Using the present value of $1 table in Exhibit 8, determine the present value of this amount compounded annually. Round to the nearest whole doll: b. Why is the present value less than the $370,000 to be received in the future? The present value is less due to over the 3 years.

Tommy John is going to receive $370,000 in three years. The current market rate of interest is 7%. a. Using the present value of $1 table in Exhibit 8, determine the present value of this amount compounded annually. Round to the nearest whole doll: b. Why is the present value less than the $370,000 to be received in the future? The present value is less due to over the 3 years.

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 9PROB

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You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
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