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Chapter 6: Question 4E (page 302)

Using the appropriate interest table, answer the following questions. (Each case is independent of the others). (a) What is the future value of 20 periodic payments of \(4,000 each made at the beginning of each period and compounded at 8%? (b) What is the present value of \)2,500 to be received at the beginning of each of 30 periods, discounted at 5% compound interest? (c) What is the future value of 15 deposits of \(2,000 each made at the beginning of each period and compounded at 10%? (Future value as of the end of the fifteenth period.) (d) What is the present value of six receipts of \)1,000 each received at the beginning of each period, discounted at 9% compounded interest?

Short Answer

Expert verified

The future value of $4,000 will be $183,047.6, the present value of $2,500 received will be $40352.68, the future value of$2,000 deposits will be $63,544.96 and the present value of $1,000 received will be $4889.65.

Step by step solution

01

Computation of future value

FV=Payment脳FVofannuity=4,000脳45.7619=$183,047.6

02

Computation of present value

PV=Paymentreceived脳PVofannuitydue=2,500脳16.4107=$40,352

03

Computation of future value

FV=Deposits脳FVofannuity=2,000脳31.77248=$63,544.96

04

Computation of present value

PV=Receipts脳PVofannuitydue=1,000脳4.88965=$4,889.65

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