Present and Future Values for Different Interest Rates
Use equations and a financial calculator to find the following values. See the hint for problems 2-1
a. An initial 500 compounded for 10years at 6 percent
b. An initial 500 compounded for 10 years at 12 percent
c. The present value of $500 due in 10 years at a 6 percent discount rate.
d. The present value of $1,552.90 due in 10 years at a 12 percent discount rate and at a 6 percent trate. Give a verbal definition of the term present cvalue and illustrate it using a time line with data from this problem. As a part of your answer, explain why present values are dependent upon interest rates.
PV=Future Value / (1+discount rate)^number of years
Please show your formula and answer, Thanks