Table page 205 what is the present value of future

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Unformatted text preview: nt Value of future cash flows of $1,000/year for four years, assuming interest rates =10%? This means how much $$ do you have to invest today, so that you will receive $1,000 at the end of year 1, year 2, year 3 & year 4? Using Table on Page 205, look under the 10% column for 4 years and see the PV factor of 3.16987. This means that if you invest ($1,000 x 3.16987) or $3,169.87 today, you will be able to receive $1,000/year for four years (like an annuity) Balance Balance today $3,169.87 Year 1 interest (10% x $3,169.87) $316.99 $3,486.86 Year 1 withdrawal -$1,000.00 $2,486.86 Year 2 interest (10% x $2,486.86) $248.69 $2,735.54 Year 2 withdrawal -$1,000.00 $1,735.54 Year 3 interest (10% x $1,735.54) $173.55 $1,909.10 Year 3 withdrawal -$1,000.00 $909.10 Year 4 interest (10% x $909.10) $90.91 $1,000.01 Year 4 withdrawal -$1,000.00 $0.01...
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This document was uploaded on 04/07/2014.

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