Fundamentals of Corporate Finance (3rd Edition) (Pearson Series in Finance)
Fundamentals of Corporate Finance (3rd Edition) (Pearson Series in Finance)
3rd Edition
ISBN: 9780133507676
Author: Jonathan Berk, Peter DeMarzo, Jarrad Harford
Publisher: PEARSON
Question
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Chapter 3, Problem 14P
Summary Introduction

Future value:

Future value refers to that value of an investment which will worth at a specified time in future. In simple words, expression of current investment in future dollars on basis of particular rate of interest is known as future value.

Present value

Present value is the current worth of a future value of money deposited at a rate of interest.

To determine:

  1. Calculate the future value of $200 in 1 year at an interest rate of 4% per year.
  2. Calculate the present value of $200 to be received after 1 year at an interest rate of 4% per year.
  3. To make choice, take $200 today or $200 in one year and reason behind that choice.

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Chapter 3 Solutions

Fundamentals of Corporate Finance (3rd Edition) (Pearson Series in Finance)

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