All are left in the investment to compound at the end

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: t to compound. At the end of 4 years, this investment has grown to $14,641 (see below) Balance Balance today $10,000 Year 1 interest (10% x $10,000) $1,000 $11,000 Year 2 interest (10% x $11,000) $1,100 $12,100 Year 3 interest (10% x $12,100) $1,210 $13,310 Year 4 interest (10% x $13,310) $1,331 $14,641 To calculate the Present Value of a one time cash inflow of $14,641 four years from today (@ 10% interest) go to Table on page 204. Look under the 10% column for 4 years. The factor is .68301. $14,641 x .68301 = $9,999.95 (difference is due to rounding) So $10,000 today is equal to $14,641 four years from now if interest rates are 10%/year. Table Page 205 What is the Prese...
View Full Document

This document was uploaded on 04/07/2014.

Ask a homework question - tutors are online