Answered: What is the present value (PV) of…

Business

Finance

What is the present value (PV) of $70,000 received six years from now, assuming the interest rate is 5% per year?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter4: Time Value Of Money

Section: Chapter Questions

Problem 5PROB

See similar textbooks

Related questions

Q: The present worth of of P40,000 in the first year and amounts of increasing by P3,000 per year…

A: Here, Initial cash flow = P40,000 Increase in amount per year through five years = P3,000 Rate of…

Q: What is the present value of $1,000 paid at the end of each of the next 56 years if the interest…

A: Present value is the current worth of the amount deposited or received in future date.

Q: What is the future value of an initial $100 after 3 years if it is invested in an account paying 10…

A: Future value is defined as the current asset value at the date of future on the basis of an assumed…

Q: What is the present value of 10 equal payments of $16,500 to be made at the end of each year for the…

A: Present value of equal payments = equal payments x PVIAF (10%, 10 years)

Q: What is the future value (FV) of $60,000 in five years, assuming the interest rate is 5% per year?

A: A study that proves that the future worth of the money is lower than its current value due to…

Q: What is the present value of $9,300 received 10 years from now using a 7% interest or discount rate,…

A: Given details are : Future value = $9300 Time period = 10 years Interest rate = 7% Compounding…

Q: Given an interest rate of 6.0 percent per year, what is the current value of a perpetual stream of…

A: Value of the perpetuity in 4 years will be = Annual amount / interest rate = $ 36,000 / 0.06 = $…

Q: What is the present value (PV) of an investment that pays $90,000 every year for four years if the…

A: The present value of an annuity is the sum of the discounted value of the periodic cash flows.…

Q: What is the present value of $2,100 to be received 14 years from now assuming a discount rate of…

A: Given information: Future value of amount is $2,100 Number of years is 14 Discount rate is 3.7% for…

Q: What present value amounts to $25,000 if it is invested for 20 years at 5% compounded annually?…

A: Solution Concept The interest rate compounded annually means the interest is charged on interest and…

Q: What is the present equivalent of $ 180,000 to be received in 15 years when the interest rate is 7%…

A: Time value of money (TVM) means that the amount of money received in the present period will…

Q: If the final value is $4400 at the end of 6 years and the simple rate of interest is 8%, what is the…

A: Formulas: Future value = Amount + Interest

Q: is invested now, $2,400 two years from now, and $3,400 four years from now at an interest rate of 8%…

A: We will use the concept of time value of money here. As per the concept of time value of money the…

Q: What is the future value in 12 years of $1,000 payments received at the beginning of each year for…

A: As a first step, let's gather all the information that question has to offer.Annuity investment = A…

Q: If you invest 5000 dollars today at a compound interest rate of 10% compounded semi-annually, what…

A: Future value = Present value * (1 + rate per period )^ No. of period

Q: What is the present value of $5,000 paid at the end of each of the next 89 years if the interest…

Q: What single investment made today, earning 10 % annual interest, will be worth $10,000 at the end of…

A: A) The present value of a future value can be calculated using the formula below: Given; FV = 10000…

Q: What is the present value of $11,800 received 20 years from now using a 13% interest or discount…

A: In the given question we needs to calculate the present value from following details: Future value =…

Q: What is the percent value of $2,725 per year, at a discount rate of 10%, if the first payment is…

A: The time value of money implies that the cash in hand at present has a higher value than the cash…

Q: uppose that $5000 is invested each quarter, for the next 20 years. what is the future worth if the…

A: An annuity is a sum of series of payments after every year or after every quarter. An annuity can be…

Q: What is the value of today of an investment that will pay $100 per year for 5 years. Assume first…

A: Present value of annuity is the present value of recurring cash flows with regular intervals at a…

Q: What is the present value of $6,000 paid at the end of each of the next 65 years if the interest…

A: Annual payment (P) = $6000 Interest rate (r) = 7% Number of annual payments (n) = 65

Q: For a present sum of $620,000, determine the annual worth (in then-current dollars) in years 1…

A: Present sum = 620000 i = 12% inflation rate = 5% n=7 years PW = 620000(A/P,12%,7) =620000(0.2191177)…

Q: An investor lends $10,000 today, to be repaid in a lump sum at the end of10 years with interest at…

A: The real rate of return of an investment is the rate of return an investment generates after taking…

Q: What interest rate, when compounded annually, is involved if an initial investment of $4000 turns…

A: Compound interest is the investment method in which the interest earned is redeposited back,…

Q: How many years will it take $145,000 to grow to $645,000 if it is invested in an account with a…

A: We use NPER function in excel to calculate time taken

Q: With a present value of $110,000, what is the size of the withdrawals that can be made at the end of…

A: We need to use present value of ordinary annuity(payment due at end) formula to calculate the size…

Q: What is the present value (PV) of $300,000 received seven years from now, assuming the interest rate…

A: Present Value refers to the value of cash flows today which is to be received at some future time…

Q: What is the present worth of the project, whichrequires $130,000 investment now and receives$40,000…

A: given, rate =14% Initial investment = $130,000 annual cashflow=$40,000 year=6

Q: ROUND ALL How much will $10,000 grow to in 3 years, assuming an interest rate of 9% compounded…

A: Future Value: It represents the future worth of the present amount and is estimated by the product…

Q: What is the future value of a series of $4,500 annual payments received at the end of each of the…

A: Annuity refers to series of equalized payments that are either made start or end of specific…

Q: What is the future value of $20,000 in three years at an annual interest rate of 5%?

A: given pv = 20000 n=3 i=5%

Q: present value

A: SOLUTION:- Present Value= Future value/(1+i)n WHERE: Future Value =$150,000 i= 11%(discount rate)…

Q: The Present Worth of $2200 in year 1 and amounts increasing by $500 per year thru year 5 at an…

A: Given information: Cash flow in year 1 is $2,200, Cash flow increases by $500 Interest rate is 13%,…

Q: What is the future value if the amount invested is 10,000 at 10% compounded quarterly for 5 years?…

A: Solution Given Present value 10000 Rate of interest 10% Compounding Quarterly…

Q: What is the value today of receiving $5,000 at the end of each year for the next two years, assuming…

A: SOLUTION : GIVEN, Annual payment = $5,000 Interest rate = 10% = 0.10 Number of years = 2 years…

Q: What is the present value of $10,000 to be received 10 years from now if the interest rateis 5…

A: Compound interest to interest charged on amount which is sum of principal and interest of previous…

Q: What is the future value of $400 deposited for one year earning an interest rate of 9 percent per…

A: The provided information are: Present value (PV) = 400 Rate of interest (i) = 9% Number of year (n)…

Q: What is the future value (FV) of $50,000 in six years, assuming the interest rate is 4% per year? A.…

A: The value of amount available at current date on the specific date in future when invested at…

Question

What is the present value (PV) of $70,000 received six years from now, assuming the interest rate is 5% per year?
O A. $45,500
O B. $52,235
OC. $91,411
D. $44,400

Expert Solution

Step 1

PV = FV / (1 + r / n)^nt

Where,

PV = Present value
FV = Future value
r = Rate of interest (percentage ÷ 100)
n = Number of times the amount is compounding
t = Time in years

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

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.

Similar questions

How much would you invest today in order to receive $30,000 in each of the following (for further Instructions on present value In Excel, see Appendix C): A. 10 years at 9% B. 8 years at 12% C. 14 years at 15% D. 19 years at 18%
If you invest $15,000 today, how much will you have in (for further instructions on future value in Excel, see Appendix C): A. 20 years at 22% B. 12 years at 10% C. 5 years at 14% D. 2 years at 7%
An investment of 1,000 produces a net cash inflow of 500 in the first year and 750 in the second year. What is the payback period? a. 1.67 years b. 0.50 year c. 2.00 years d. 1.20 years e. Cannot be determined
If you invest $12,000 today, how much will you have in (for further Instructions on future value in Excel, see Appendix C): A. 10 years at 9% B. 8 years at 12% C. 14 years at l5% D. 19 years at 18%
If an asset declines in value from 5,000 to 3,500 over nine years, what is the mean annual growth rate in the assets value over these nine years?
Jullo Company is considering the purchase of a new bubble packaging machine. If the machine will provide $20,000 annual savings for 10 years and can be sold for $50,000 at the end of the period, what is the present value of the machine investment at a 9% interest rate with savings realized at year end?
How much would you invest today in order to receive $30,000 in each of the following (for further instructions on present value in Excel, see Appendix C): A. 20 years at 22% B. 12 years at 10% C. 5 years at 14% D. 2 years at 7%
Assume that an investment of 100,000 produces a net cash flow of 60,000 per year for two years. The discount factor for year 1 is 0.89 and for year 2 is 0.80. The NPV is a. 0 b. 6,800 c. 1,400 d. (4,000)