Question

For each of the following, compute the present value (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)): Present Value Years Interest Rate Future value $ 13 7 % $ 15,451 4 13 51,557 29 14 886,073 40 9 550,164

Answer 1

To calculate these values, we use the present value formula:

FV = PV (1 + i)^n

Where:

• FV = Future Value
• PV = Present Value
• i = interest rate
• n = number of compounding periods (years in this case)

Present value #1

15,451 = PV (1 + 0.07)^13

15,451 = PV (2.41)

15,451 / 2.41 = 6,411

Present value #2

51,557 = PV (1 + 0.13)^4

51,557 = PV (1.63)

51,557 / 1.63 = 33,471

Present value #3

886,073 = PV (1 + 0.14)^29

886,073 = PV (44.69)

886,073 / 44.69 = 19,827

Present value #4

550,164 = PV (1 + 0.09)^40

550,164 = PV (31.41)

550,164 / 31.41 = 17,516