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Your uncle promises to give you \$600 per quarter for the next five years. How much is his promise worth right now of the interest rate is 0.10

Your uncle promises to give you \$600 per quarter for the next five years. How

much is his promise worth right now of the interest rate is 0.10 compounded

quarterly?

The solution is... View the full answer

• Future value = Amount (1+ quarterly interest rate)^number of quarters
• teaching123
• May 07, 2016 at 12:02pm
• = 600*(1+0.025)^20 = 600*(1.025)^20 = 600*1.6386 = 983.16
• teaching123
• May 07, 2016 at 12:03pm
• sorry it will be Future value = Amount /interest rate[(1+ quarterly interest rate)^number of quarters - 1] = 600/0.025[1.6386 - 1] = 24000*0.6386 = 15326.40
• teaching123
• May 07, 2016 at 12:06pm
• Earlier I have made mistake in formula, hope you will understand. Please ask for any clarification.
• teaching123
• May 07, 2016 at 12:06pm
• Present value of promise = 600 PVAF(2.5%,20) = 600*15.589 = 9353.40
• teaching123
• May 07, 2016 at 12:11pm

Amount of promise worth right now =pv(rate,nper,pmt,fv)... View the full answer

600( 1+0.1) ^ 20 = 4036.49 if the interest rate... View the full answer

FV=PV(1+i) n     PV= present value  FV=... View the full answer

1 comment
• correct answer quarterly rate = 0.025 pv= 600(1-(1+0.025)^-20/0.025) =9353.4974
• Enoma
• May 07, 2016 at 1:41pm

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