Question: Present and future values for different interest rates
Find the following values. Compounding/discounting occurs annually. Round your answers to the nearest cent.
a. An initial $400 compounded for 10 years at 10%.$
b. An initial $400 compounded for 10 years at 20%.$
c. The present value of $400 due in 10 year at 10%.$
d. The present value of $2,095 due in 10 years at 20%.$
e. The present value of $2,095 due in 10 years at 10%.$
Define present value.
The present value is the value today of a sum of money to be received in the future and in general is less than the future value.
The present value is the value today of a sum of money to be received in the future and in general is greater than the future value.
The present value is the value today of a sum of money to be received in the future and in general is equal to the future value.
The present value is the value in the future of a sum of money to be received today and in general is less than the future value.
The present value is the value in the future of a sum of money to be received today and in general is greater than the future value.
- Select-I II III IV V Item 6
How are present values affected by interest rates?