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Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881

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BuyFindarrow_forward

Cornerstones of Financial Accounti...

4th Edition
Jay Rich + 1 other
ISBN: 9781337690881
Textbook Problem
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Future Values

Refer to the appropriate tables on pages 783-786.

Required:

Nate: Round answers to two decimal places. Determine the:

a. future value of a single deposit of SI 5.000 that earns compound interest for 4 years at an interest rate of 10% per year.

b. annual interest rate that will produce a future value of SI3,416.80 in 6 years from a single deposit of 58,000.

c. size of annual cash flows for an annuity of nine cash flows that will produce a future value of $79,428.10 at an interest rate of 9% per year.

d. number of periods required to produce a future value of $17,755.50 from an initial deposit of $7,500 if the annual interest rate is 9%.

To determine

Concept introduction:

Time value of money:

Time value of money is the concept that differentiates the value of money received today and the value of same money received in future. According to this concept, the same amount of money to be received in future shall have lower present value (value of the money today) due to the interest that could be earned on that money.

To calculate:

Future value and present value of the following and rate or period of the following.

Explanation

After collecting the following data we apply the above mentioned formula of present value and future value to get the answer.

a.

Present Value(A) 15000
Interest Rate 10%
Years(10*1) 4
Present Value of $1 Annuity (7%,10) (B) $1.46
Present Value A*B 21,961.50

b.

Future Value 13416.8
Present Value 8000
years(6*1) 6
Compounding 1
Rate(13416.8, 6 years ) 9%

c.

Present Value(A) 79428...

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