Question

Business Mathematics answers the questions show the steps based on a formula.

4. Use formulas to find the present value for each of the following:

	Future Value	Rate	Number of Years	Compounded	Present Value
1	$1	10%	5	Annually	?
2	$1	12%	8	Semi-annually	?
3	$1	6%	10	Quarterly	?
4	$1	12%	2	Monthly	?

Answer 1

Solution.>

Part 1>

Present Value = Future Value / ( 1 + r )^n

Present Value = $1 / ( 1 + 10% )^5

Present Value = $0.62

Part 2>

Present Value = Future Value / ( 1 + r/2 )^2n

Present Value = $1 / ( 1 + 12%/2 )^2*8

Present Value = $0.39

Part 3>

Present Value = Future Value / ( 1 + r/4 )^4n

Present Value = $1 / ( 1 + 6%/4 )^4*10

Present Value = $0.55

Part 4>

Present Value = Future Value / ( 1 + r/12 )^12n

Present Value = $1 / ( 1 + 12%/12 )^12*2

Present Value = $0.79

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