About the present value concept

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Reference no: EM131992068

Present value concept Answer each of the following questions.

a. What single investment made? today, earning 9?% annual? interest, will be worth $5,300 at the end of 4 years?

b. What is the present value of $5,300 to be received at the end of 4 years if the discount rate is 9?%?

c. What is the most you would pay today for a promise to repay you $5,300 at the end of 4 years if your opportunity cost is 9?%?

d. ?Compare, contrast, and discuss your findings in part a through c

a. A single investment made? today, earning 9?% annual? interest, worth $5,300 at the end of 4 years is $ (Round to the nearest? cent.)

b. The present value of $5 comma 3005,300 to be received at the end of 44 years, if the discount rate is 9% is $ (Round to the nearest? cent.)

c. The most you would pay today for a promise to repay you $5,300 at the end of 4 years if your opportunity cost is 9?% is $ ?(Round to the nearest? cent.)

d. ?Compare, contrast, and discuss your findings in part a through c. (Select all answers that? apply.)

A. In parts a and c?, $5,300 is the future? value, FV.

In part b?, $5,300 is the present? value, PV. Therefore, parts a and c have the same? answer, while part b has a different answer.

B. The annual interest rate is also called the discount rate or the opportunity cost.

C. In all three? cases, the answer is $3,754.65. In part a?, it is the? payment, PMT. In part b?, it is the present value, PV. In part c?, it is the future? value, FV.

D. In all three? cases, you are solving for the present? value, PV?, which is $3,754.65

Reference no: EM131992068

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