Chapter 11, Problem 16AT

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8th Edition

Robert Brechner + 1 other

ISBN: 9781305585447

Textbook Problem

Solve the following word problems by using Table 11-1 or 11-2. When necessary, create new table factors. Round dollars to the nearest cent and percents to the nearest hundredth of a percent.

What is the present value of $73,000 in 11 years if the interest rate is

To determine

**To calculate:** The present value (principal) for an investment with compound amount

Explanation

**Given Information:**

An investment with compound amount

**Formula used:**

Compounding period can be defined as the duration or length of time from one interest payment to the next. If an investment made for 4 years at

Here, *m* is the period per year.

The interest rate per period can be calculated by dividing the annual, or nominal, rate by the number of periods per year,

The present value (principal) can be calculated by the formula given below:

In Present value table 11-2, the table factor is the intersection of the rate-per-period column and the number-of-periods row is the present value of

The compound interest can be calculated by the formula given below:

Steps for using the present value table:

Step 1: Along the top row for finding the interest rate per period.

Step 2: See below that column of the row corresponding to the number of periods.

Step 3: The table factor found at the intersection of the rate-per-period column and the number-of-periods row is the present value of

Sect-11.I P-1TIESect-11.I P-2TIESect-11.I P-3TIESect-11.I P-4TIESect-11.I P-5TIESect-11.I P-1RESect-11.I P-2RESect-11.I P-3RESect-11.I P-4RESect-11.I P-5RE

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