Question

(a) What is the present value of $34,900 due 9 periods from now, discounted at 9%? (Round answer to 2 decimal places, e.g. 25.25.) Present value $enter the present value of the investment discounted at 9% rounded to 2 decimal places 16068.93 (b) What is the present value of $34,900 to be received at the end of each of 12 periods, discounted at 8%? (Round answer to 2 decimal places, e.g. 25.25.)

Answer 1

Instructions are listed below.

Step-by-step explanation:

Giving the following information:

a) What is the present value of $34,900 due 9 periods from now, discounted at 9%

We need to use the following formula:

PV= FV/(1+i)^n

PV= 34,900/1.09^9= $16,068.83

(b) What is the present value of $34,900 to be received at the end of each of 12 periods, discounted at 8%

First, we need to find the final value:

FV= {A*[(1+i)^n-1]}/i

A= annual deposit

FV= {34,900*[(1.08^12)-1]}/0.08= 662,301.71

PV= 662,301.71/(1.08^12)= 263,009.12