Present+Value,+Future+Value,+and+Annuity+due

# Present+Value,+Future+Value,+and+Annuity+due - 3 You will...

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3. You will receive \$5,000 three years from now. The discount rate is 8 percent. a. What is the value of your investment two years from now? Multiply \$5,000 _ .926 (one year’s discount rate at 8 percent).   \$ 4,630 b. What is the value of your investment one year from now? Multiply your answer to part a by .926 (one year’s discount rate at 8 percent).   \$ 4,287 c. What is the value of your investment today? Multiply your answer to part b by .926 (one year’s discount rate at 8 percent).   \$ 3,970 d. Confirm that your answer to part c is correct by going to Appendix B (present value of \$1) for n _ 3 and i _ 8 percent. Multiply this tabular value by \$5,000 and compare your answer to part c. There may be a slight difference due to rounding. \$ 3,969.16 4. If you invest \$9,000 today, how much will you have: a. In 2 years at 9 percent? b. In 7 years at 12 percent? c. In 25 years at 14 percent? d.

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Present+Value,+Future+Value,+and+Annuity+due - 3 You will...

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