Question

Solve using excel (show work)

What is the total present value of the following amounts:

a.)$1000 received at the end of one year. Use a discount of 2.5%

b.) $5000 received at the end of three years. Use a discount of 4.0%

c.) $10,000 received at the end of 10 years. Use a discount rate of 9%.

Answer 1

	FV =	Future Value
	PV =	Present Value
	r =	rate of interest
	n=	no of period
a)	FV =	PV (1 + r )n
	1000 =	PV*(1+2.5%)^1
	1000 =	1.025* PV
	PV =	1000 / 1.025
	PV =	975.61
b)	FV =	PV (1 + r )n
	5000 =	PV*(1+4%)^3
	5000 =	1.1248640* PV
	PV =	5000/ 1.1248640
	PV =	4,444.98
c)	FV =	PV (1 + r )n
	10000 =	PV*(1+9%)^10
	10000 =	2.367364* PV
	PV =	10000/ 2.367364
	PV =	4,224.11