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Unformatted text preview: Problems 1. You invest $3,000 a year for three years at 12 percent. a . What is the value of your investment after one year? Multiply $3,000 × 1.12. b . What is the value of your investment after two years? Multiply your answer to part a by 1.12. c . What is the value of your investment after three years? Multiply your answer to part b by 1.12. This gives your final answer. d . Confirm that your final answer is correct by going to Appendix A (future value of $1), and looking up the future value for n = 3, and i = 12 percent. Multiply this tabular value by $3,000 and compare your answer to the answer in part c . There may be a slight difference due to rounding. 91. Solution: a. $3,000 × 1.12 = $3,360.00 b. $3,360 × 1.12 = $3,763.20 c. $3,763.20 × 1.12 = $4,214.78 d. $3,000 × 1.405 = $4,215.00 (Appendix A) 2. What is the present value of: a . $9,000 in 7 years at 8 percent? b . $20,000 in 5 years at 10 percent? c . $10,000 in 25 years at 6 percent? d . $1,000 in 50 years at 16 percent? 9.2. Solution: Appendix B PV = FV × PV IF a. $ 9,000 × .583 = $5,247 b. $20,000 × .621 = $12,420 c. $10,000 × .233 = $2,330 d. $ 1,000 × .001 = $1 3. You will receive $5,000 three years from now. The discount rate is 8 percent.You will receive $5,000 three years from now....
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This note was uploaded on 10/30/2011 for the course FINANCE 602 taught by Professor Soto during the Fall '11 term at Pontifical Catholic University of Peru.
 Fall '11
 Soto
 Finance

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