Use both the TVM equations and a financial calculator to find
the following values. Round your answers to the nearest cent.
(Hint: Using a financial calculator, you can enter the known values
and then press the appropriate key to find the unknown variable.
Then, without clearing the TVM register, you can "override" the
variable that changes by simply entering a new value for it and
then pressing the key for the unknown variable to obtain the second
answer. This procedure can be used in parts b and d, and in many
other situations, to see how changes in input variables affect the
output variable
A.) An initial $400 compounded for 10 years at 9.6 percent. $
_______
B.) An initial $400 compounded for 10 years at 19.2 percent. $
________
C.) The present value of $400 due in 10 years at a 9.6 percent
discount rate. $ _______
D.) The present value of $400 due in 10 years at a 19.2 percent
discount rate. $ ________
(A)-An initial $400 compounded for 10 years at 9.6 percent.
Future Value = Present Value x (1 + r)n
= $400 x (1 + 0.096)10
= $400 x 2.50095
= $1,000.38
(B)-An initial $400 compounded for 10 years at 19.2 percent
Future Value = Present Value x (1 + r)n
= $400 x (1 + 0.1920)10
= $400 x 5.79112
= $2,316.45
(C)-The present value of $400 due in 10 years at a 9.6 percent discount rate.
Present Value = Future Value / (1 + r)n
= $400 / (1 + 0.096)10
= $40 / 2.50095
= $159.94
(D)-The present value of $400 due in 10 years at a 19.2 percent discount rate
Present Value = Future Value / (1 + r)n
= $400 / (1 + 0.1920)10
= $400 / 5.79112
= $69.07
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