Question

Determine the present value of the following single amounts (FV of $1, PV of $1, FVA of $1, PVA of $1,FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided. Invested Amount i = n = Future Value 1. $15,500 5% 12 2. $23,000 5% 6 3. $35,000 11% 18 4. $56,000 6% 14

Answer 1

Calculation of Present value:

1)

Future Value = 15500

Interest rate (r) = 5%

Years (n)= 12

Present value = Future value*Present value interest factor(5%,12)

= 15500*0.5568 = 8630.4 i.e. 8631

2)

Future Value = 23000

Interest rate (r) = 5%

Years (n)= 6

Present value = Future value*Present value interest factor(5%,6)

= 23000*0.7462 = 17162.6 i.e. 17163

3)

Future Value = 35000

Interest rate (r) = 11%

Years (n)= 18

Present value = Future value*Present value interest factor(11%,18)

= 35000*0.1528 = 5348

4)

Future Value = 56000

Interest rate (r) = 6%

Years (n)= 14

Present value = Future value*Present value interest factor(6%,14)

= 56000*0.4423 = 24768.8 i.e. 24769