How much would you have to invest today to receive
a.
b.
c.
d.
a.
To calculate: The amount required today for an investment to become $15,000 in 8 years at 10%.
Introduction
Present value:
The current value of an investment or an asset is termed as its present value. It is calculated by discounting the future value of the investment or asset.
Answer to Problem 10P
$6,997.61 is required today for the investment to become $15,000 in 8 years at 10%.
Explanation of Solution
The calculation of the present value is as follows.
b.
To calculate: The amount required today for an investment to become $20,000 in 12 years at 13%.
Introduction
Present value:
The current value of an investment or an asset is termed as its present value. It is calculated by discounting the future value of the investment or asset.
Answer to Problem 10P
$4,614.12 is required today for the investment to become $20,000 in 12 years at 13%.
Explanation of Solution
The calculation of the present value is as follows.
c.
To calculate: The amount required today for an investment to become $6,000 each year for 10 years at 9%.
Introduction
Present value:
The current value of an investment or an asset is termed as its present value. It is calculated by discounting the future value of the investment or asset.
Annuity:
When a payment is made or received in a series of equivalent intervals, it is termed as an annuity. Such payments can be made weekly, monthly, quarterly, or annually.
Answer to Problem 10P
$38,505.95 is required today for the investment to become $6,000 each year for 10 years at 9%.
Explanation of Solution
The calculation of the present value is as follows.
d.
To calculate: The amount required today for an investment to become $50,000 each year for 50 years at 7%.
Introduction
Present value:
The current value of an investment or an asset is termed as its present value. It is calculated by discounting the future value of the investment or asset.
Annuity:
When a payment is made or received in a series of equivalent intervals, it is termed as an annuity. Such payments can be made weekly, monthly, quarterly, or annually.
Answer to Problem 10P
$38,505.95 is required today for an investment to become $50,000 each year for 50 years at 7%.
Explanation of Solution
The calculation of the present value is as follows.
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Chapter 9 Solutions
Loose Leaf for Foundations of Financial Management Format: Loose-leaf
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