Concept explainers
a.
To calculate:
Future value of cash flow: If a single cash flow is currently invested with a
b.
To calculate: Future value of cash at 12% compounded semiannually for 5years.
Future value of cash flow: If a single cash flow is currently invested with a compound interest, then its growth over the period of time is known as future value of cash flow.
c.
To compute: Future value of cash at 12% compounded quarterly for 5 years.
Future value of cash flow: If a single cash flow is currently invested with a compound interest, then its growth over the period of time is known as future value of cash flow.
d.
To compute: Future value of cash at 12% compounded monthly for 5 years.
Future value of cash flow: If a single cash flow is currently invested with a compound interest, then its growth over the period of time is known as future value of cash flow.
e.
To compute: Future value of cash at 12% compounded daily for 5 years.
Future value of cash flow: If a single cash flow is currently invested with a compound interest, then its growth over the period of time is known as future value of cash flow.
f.
To explain: Reason for the occurrences of this observed pattern in face value.
Future value of cash flow: If a single cash flow is currently invested with a compound interest, then its growth over the period of time is known as future value of cash flow.
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Chapter 5 Solutions
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
- 2. Find the present value of $500 due in the future under each of these conditions: a. 12% nominal rate, semiannual compounding, discounted back 5 years b. 12% nominal rate, quarterly compounding, discounted back 5 years c. 12% nominal rate, monthly compounding, discounted back 1 year Hint: identify the interest rate per period and the total number of periods in each scenario first. Oarrow_forwardFind the accumulated value of an investment of $10,000 for 3 years at an interest rate of 5.5% if the money is a. compounded semiannually; b. compounded quarterly; c. compounded monthly d. compounded continuously. Round answers to the nearest cent. a. What is the accumulated value if the money is compounded semiannually? (Round your answer to the nearest cent.)arrow_forwardUsing the compound interest formula, calculate both the value of the investment and the interest earned after the given time periods. a) $4000.00 for five years at 7% compounded semi-annuallyarrow_forward
- Find the accumulated value of an investment of $15,000 for 4 years at an interest rate of 4.5% if the money is a. compounded semiannually; b. compounded quarterly; c. compounded monthly d. compounded continuously. Round answers to the nearest cent. a. What is the accumulated value if the money is compounded semiannually?arrow_forwardIf an initial investment of $1,000 is invested at 8% interest per year with semi-annual compounding, how much would be in the account after five years? A. $1,081.60 B. $1,061.66 C. $1,051.00 D. $1,281.60 The difference between the present and future worth of money at some time in the future is called A. Discount B. Deduction C. Inflation D. Depletionarrow_forward1.If money is worth 5% compounded semi annually, find the present value of a sequence of 12 semi annual payments of P450 each, the first of which is due at the end of 4 1/2 years? 2.If money is worth 5% compounded quarterly , find the future worth of a sequence of 12 semi annual payments of P1200 each, the first of which is due at the end of 4 1/2 years?arrow_forward
- If $5 000.00 is placed on account for 6 years and earns interest at 12% p.a. compounded monthly, it would mature to the same future value as if $x is placed on an account for 4 years at 16% p.a. compounded quarterly. Find the value of x. x = $arrow_forwardFind the following values Compounding/discounting occurs at the end of each year. a. An initial $200 compounded for 10 years at 4% b. An initial $200 compounded for 10 years at 8% c. The present value of $200 due in 10 years at 4% d. The present value of $1,870 due in 10 years at 8% and at 4% e. Define present value and illustrate it using a time line with data from part d. How are present values affected by interest rates?arrow_forwardUsing the appropriate PV table, compute the present value of the following amounts: a. $24,000 payable at the end of each year for 5 years with 12% interest compounded annually.b. $16,000 receivable at the beginning of each semiannual period for 20 years with 10% interest compounded semiannually.c. $3,000 payable at the beginning of the seventh, eighth, and ninth years at 3% compounded annually.arrow_forward
- Determine the future value of $10,000 under each of the following sets of assumptions: Annual Rate Period Invested Interest Compounded1. 10% 10 years Semiannually2. 12 5 years Quarterly3. 24 30 months Monthlyarrow_forwardFor each of the following situations involving annuities, solve for the unknown. Assume that interest is compounded annually and that all annuity amounts are received at the end of each period. (i = interest rate, and n = number of years) (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided. Round your final answers to nearest whole dollar amount.) Present Value Annuity Amount i = n = 1. ? $2,400 8% 5 2. 533,082 140,000 ? 4 3. 583,150 180,000 9% ? 4. 530,000 75,502 ? 8 5. 235,000 ? 10% 4arrow_forwardDetermine the future value of $10,000 under each of the following sets of assumptions: Interest Compounded Annual Rate Period Invested Semiannually Quarterly Monthly 1. 10% 10 years 5 years 2. 12 3. 30 months 24arrow_forward
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