BuyFindarrow_forward

Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
ISBN: 9781285867977

Solutions

Chapter
Section
BuyFindarrow_forward

Fundamentals of Financial Manageme...

14th Edition
Eugene F. Brigham + 1 other
ISBN: 9781285867977
Textbook Problem

PRESENT AND FUTURE VALUES FOR DIFFERENT PERIOOS Find the following values using the equations and then a financial calculator. Compounding/discounting occurs annually.

  1. a. An initial 5500 compounded for 1 year at 6%
  2. b. An initial 5500 compounded for 2 years at 6%
  3. c. The present value of 5500 due in 1 year at a discount rate of 6%
  4. d. The present value of 5500 due in 2 years at a discount rate of 6%

a.

Summary Introduction

To determine: The present value and the future value.

Present Value: The present value refers to that value, which is the current value and by which the future value of the annuity is determined. The calculation of the future value depends on the present value, which is calculated at a discounted rate.

Future Value: The future value means that value of the investment, which will be realized in the future. With the help of the calculation of future value, an analysis of the amount to be invested can be made. This is very useful for the financial users and investors.

Explanation

Solution:

Given,

The cash flow is $500,

The rate of interest is 6% annually.

The time period is 1 year.

Calculate the future value.

The formula to calculate the future value is,

FV=PV(1+I)N

Where,

  • FV is the future value.
  • PV is the present value

b.

Summary Introduction

To determine: The present value and the future value.

c.

Summary Introduction

To determine: The present value and the future value.

d.

Summary Introduction

To determine: The present value and the future value.

Still sussing out bartleby?

Check out a sample textbook solution.

See a sample solution

The Solution to Your Study Problems

Bartleby provides explanations to thousands of textbook problems written by our experts, many with advanced degrees!

Get Started

Additional Business Solutions

Find more solutions based on key concepts

Show solutions add

EXPECTED AND REQUIRED RATES OF RETURN Assume that the risk-free rate is 5% and the market risk premium is 6%. W...

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

Give three examples of important trade-offs that you face in your life.

Principles of Macroeconomics (MindTap Course List)

What is management?

Foundations of Business (MindTap Course List)

What are generally accepted accounting principles (GAAP)?

College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)