For each of the following, compute the present value (Enter rounded answers as directed, but do
not use rounded numbers in intermediate calculations. Round your answers to 2 decimal places
(e.g., 32.16)):
Solution
Future Value = Present Value * ( 1+i)n Hence , Present Value = Future Value /( 1+i)n
1) n = 9 i = 7% = 0.07 Future Value = 18828 Hence, Present Value = 18828 /
( 1+0.07)9 = 18828 / 1.8385 = 10240.96 2) n = 1 i = 12% = 0.12 Future
Value = 43017 Hence, Present Value = 43017 / ( 1+0.12)1 = 43017 / 1.12 =
38408.04 3) n = 13 i = 15% = 0.15 Future Value = 805382 Hence,
Present Value = 805382 / ( 1+0.15)13 = 805382 / 6.1528 = 130896.83 4) n
= 18 i = 14% = 0.14 Future Value = 662816 Hence, Present Value = 662816 / (
1+0.14)18 = 662816 / 10.5752 = 62676.45