# Economic Growth

Qrb/501 Week 4
Individual Assignment     QRB/501 Week 4

Please, complete problems, exploration and questions below (total points-14).
1. Marshall, Ch. 6, problem 6-26 a, b, c & d (5 points total: 1.25 point per
problem)   Present value calculations.   Using a present value table, your calculator or a computer program present value function, answer the following questions:

a. What is the present value of nine annual cash payments of \$4,000, to be paid at the end of each year using an interest rate of 6%   Using my excel chart I get the following answer:

PV -                 4,000
Years                 9
Discount rate     6%
=           \$2,367.59

b. What is the present value of \$15,000 to be paid at the end of 20 years, using an interest rate of 18%?

I used my formula on this problem also in excel.
PV -                   15,000
Years                   20
Discount rate       18%
=                 \$547.58   (or \$548 if rounded out)

c. How much cash must be deposited in a savings account as a single amount in order to accumulate \$300,000 at the end of 12 years, assuming that the account will earn 10% interest?

The excel formula was used here also.
PV -                   300,000
Years                   12
Discount rate       10%
=                 \$ 95,589.25 (or 95,589 rounded out)

d. How much cash must be deposited in a savings account (as a single amount) in order to accumulate \$50,000 at the end of seven years, assuming that the account will earn 12% interest?

I used my excel formula to get answer.
PV -                   50,000
Years                   7
Discount rate       12%
=                 \$ 22,617.46 (or 22,617 if rounded out)

2.   Sevilla & Somers, Topic 6, exploration 8b

8. Consider the formula P=+67.38*(1.26).   If we let P represent the...