Question

An investment will pay $100 at the end of each of the next 3 years, $200 at the end of Year 4, $300 at the end of Year 5, and $500 at the end of Year 6. If other investments of equal risk earn 6% annually, what is its present value? Its future value? Do not round intermediate calculations. Round your answers to the nearest cent..

Answer 1

PV = 100/(1 + 0.06)^1 + 100/(1 + 0.06)^2 + 100/(1 + 0.06)^3 + 200/(1 + 0.06)^4 + 300/(1 + 0.06)^5 + 500/(1 + 0.06)^6

PV = 94.3396226415 + 88.9996440014 + 83.9619283032 + 158.4187326476 + 224.1774518598 + 352.4802702198

PV = $1,002.37764967

PV = $1,002.38

FV = 100 * (1 + 0.06)^1 + 100 * (1 + 0.06)^2 + 100 * (1 + 0.06)^3 + 200 * (1 + 0.06)^4 + 300 * (1 + 0.06)^5 + 500 * (1 + 0.06)^6

FV = 106 + 112.36 + 119.1016 + 252.495392 + 401.46767328 + 709.259556128

FV = 1,700.68422141

FV = $1,700.68