Concept explainers
a.
To Determine: The
a.
Answer to Problem 10P
The future value compounded for 10 years is $895.42.
Explanation of Solution
Determine the future value compounded for 10 years using formula
Therefore, the future value compounded for 10 years using formula is $895.42.
Determine the future value compounded for 10 years using excel
Excel Spreadsheet:
Therefore, the future value compounded for 10 years using excel is $895.42.
b.
To Determine: The future value compounded for 2 years.
b.
Answer to Problem 10P
The future value compounded for 2 years is $1,552.92.
Explanation of Solution
Determine the future value compounded for 2 years using formula
Therefore, the future value compounded for 2 years using formula is $1,552.92.
Determine the future value compounded for 2 years using excel
Excel Spreadsheet:
Therefore, the future value compounded for 2 year using excel is $1,552.92.
c.
To Determine: The present value of due in 1 year.
c.
Answer to Problem 10P
The present value of due in 1 year is $279.20.
Explanation of Solution
Determine the present value of due in 1 year using formula
Therefore, the present value of due in 1 year is $279.20.
Determine the present value of due in 1 year using excel
Excel Spreadsheet:
Therefore, the present value of due in 1 year using excel is $279.20.
d.
To Determine: The present value of due in 2 years.
d.
Answer to Problem 10P
The present value of due in 2 years is $160.99.
Explanation of Solution
Determine the present value of due in 2 years using formula
Therefore, the present value of due in 2 years is $160.99.
Determine the present value of due in 2 years using excel
Excel Spreadsheet:
Therefore, the present value of due in 2 years using excel is $160.99.
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Chapter 4 Solutions
Corporate Finance: A Focused Approach (mindtap Course List)
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- Calculating interest earned and future value of savings account. If you put 6,000 in a savings account that pays interest at the rate of 3 percent, compounded annually, how much will you have in five years? (Hint: Use the future value formula.) How much interest will you earn during the five years? If you put 6,000 each year into a savings account that pays interest at the rate of 4 percent a year, how much would you have after five years?arrow_forwardConestoga Plumbing plans to invest in a new pump that is anticipated to provide annual savings for 10 years of $50,000. The pump can be sold at the end of the period for $100,000. What is the present value of the investment in the pump at a 9% interest rate given that savings are realized at year end?arrow_forward
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