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ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Question

Transcribed Image Text:Find the present value of the given future payment at the specified interest r
$5000 due in 20 years at 5% compounded annually
The present value is approximately S
(Round to the nearest cent as needed.)
Expert Solution
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Step 1
Given information,
- Future value (FV): $5000
- Interest rate (r): 5% compunded annually
- Compunding in an year (m): 1
- Time period (t): 20 years
To find: present value
Step by stepSolved in 2 steps
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Similar questions
- A bank made a farmer a loan of $1,400 at 16% for three years compounded annually. Find the future value and the compound interest paid on the loan. Compare the compound interest with simple interest for the same period. Future value=S (Round to the nearest cent as needed.)arrow_forwardQ A series of equal quarterly payments of $5,000 for 10 years is equivalent to what present amount at an interest rate of 9% compounded montly.arrow_forwardCompare the interest earned by $10,000 for three years at 9% simple interest with interest earned by the same amount for three years at 9% compounded annually. Why does a difference occur? Click the icon to view the interest and annuity table for discrete compounding when i=9% per year. The simple interest earned is (Round to the nearest dollar.) (Round to the nearest dollar.) The compound interest earned is $ There is a difference in the amount of interest earned because compound interest allows interest from previous years to earn additional interest, whereas simple interest only considers the original principal.arrow_forward
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