Response to the following problem:
This problem demonstrates the relationship between the future value of 1 and the present value of 1.
1. Rocky Tanner will need $10,000 at the end of 10 years to cover a business expense due at that time. To meet this future expense, Tanner can invest a sum today. His investment will earn 6% each year over the 10-year period. How much must Tanner invest today (present value)?
2. Now, let's turn this present-value situation around and view it in terms of a future value: Tanner has $5,580 to invest today. He can earn 6% each year over a 10-year period. How much will his investment be worth at the end of 10 years (future value)?