Question

# Find the present value of \$800 due in the future under each of these conditions: 10%...

Find the present value of \$800 due in the future under each of these conditions:

10% nominal rate, semiannual compounding, discounted back 8 years. Round your answer to the nearest cent.
\$

10% nominal rate, quarterly compounding, discounted back 8 years. Round your answer to the nearest cent.
\$

10% nominal rate, monthly compounding, discounted back 1 year. Round your answer to the nearest cent.
\$

1.We use the formula:
A=P(1+r/200)^2n
where
A=future value
P=present value
r=rate of interest
n=time period.

800=P(1+0.1/2)^(2*8)

P=\$800/(1+0.1/2)^(2*8)

=\$366.49

2.We use the formula:
A=P(1+r/400)^4n
where
A=future value
P=present value
r=rate of interest
n=time period.

800=P(1+10/400)^(4*8)

P=\$800/(1+10/400)^(4*8)

which is equal to

=363.02(Approx)

3.We use the formula:
A=P(1+r/1200)^12n
where
A=future value
P=present value
r=rate of interest
n=time period.

800=P(1+10/1200)^(12)

P=\$800/(1+10/1200)^(12)

which is equal to

=\$724.17(Approx).

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