Asked by Jordyn Schultz on May 15, 2024
Verified
Compute the present value in each of the following problems. Use Tables 16-1A&B or 16-2A&B or a calculator.
a.Compute the amount that you must lend today at 10% compounded semiannually to be repaid a total (principal and interest) of $10,000 in 13 years.
b.Compute the amount that you must invest today at 12% compounded annually to have $1,500 in 3 years.
Compounded Semiannually
A method of calculating interest where the interest is added to the principal twice a year, leading to interest earned on interest.
Compounded Annually
This refers to the process of calculating interest on an investment or loan on a yearly basis, where interest from one year is added to the principal for calculation of interest in the next year.
Present Value
The current value of a future sum of money or stream of cash flows, given a specified rate of return.
- Gauge the present estimation of future financial quantities to achieve defined financial outcomes.
- Operate financial tables or calculators to settle questions pertained to the time value of money.
- Identify the necessary initial investment to reach a desired future financial goal.
Verified Answer
GS
Learning Objectives
- Gauge the present estimation of future financial quantities to achieve defined financial outcomes.
- Operate financial tables or calculators to settle questions pertained to the time value of money.
- Identify the necessary initial investment to reach a desired future financial goal.