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Unformatted text preview: 9,000 x 2.211 = 19,899 c. In 25 years at 14 percent? 9,000 x 26.462 = 238,158 d. In 25 years at 14 percent (compounded semiannually)? n = 25 x 2 = 50 i = 14%/2 = 7% FV = PV x FVif 9,000 x 29.457 = 265,113 5. Your uncle offers you a choice of $30,000 in 50 years or $95 today. If money is discounted at 12 percent, which should you choose? PV = FV x PVif 30,000 x 0.003 = 90 FV = PV x FVif 95 x 289.00 = 27,455 Based on the present value of receiving $30,000 in 50 years and the future value of investing $95.00 that is received today I would opt to take the $30,000 in 50 years. Because in the long run I end up with $2,545 more than if I invested the $95 on my own at the same interest rate for 50 years. Some may opt to take the $95 today just because they get $5 more today never thinking that maybe that $95.00 today will not be worth $30,000, 50 years from today....
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This note was uploaded on 11/09/2010 for the course FIN 200 FIN 200 taught by Professor Smith during the Spring '10 term at University of Phoenix.
 Spring '10
 SMITH

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