Question

For each of the following, compute the present value: (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.)

Present Value		Years			Interest Rate				Future Value
$			12			4	%			$	18,128
			4			9					42,317
			16			12					798,382
			21			11					655,816

Answer 1

PART A:

PV = FV / ( 1+r)^n

= 18128 / ( 1 + 0.04)^ 12

= 18128 / ( 1.04)^ 12

= 18128 / 1.6010

= 11322.70

PART B:

PV = FV / ( 1+r)^n

= 42317 / ( 1 + 0.09)^ 4

= 42317 / ( 1.09)^ 4

= 42317 / 1.41

= 29978.43

PART C:

PV = FV / ( 1+r)^n

= 798382 / ( 1 + 0.12)^ 16

= 798382 / ( 1.12)^ 16

= 798382 / 6.13

= 130233.40

PART D:

PV = FV / ( 1+r)^n

= 655816 / ( 1 + 0.11)^ 21

= 655816 / ( 1.11)^ 21

= 655816/ 8.9492

= 73282.36