Using a present value table, your calculator, or a computer program present value function, answer the following questions:

Microsoft Excel's Present Value function was used to answer these 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%?

ANSWER:

The present value of nine annual cash payments of $4,000 paid over a nine year period (totaling $36,000), at an interest rate of %6 is $27,206.77.

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

ANSWER:

The present value of $15,000 at the end of a 20 year period with an interest rate of 18% would be $547.58.

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 accounting will earn 10% interest?

ANSWER:

The one time amount to be deposited into a savings account, to accumulate $300,000 at the end of a 12 year period with an interest rate of 10% would be $95,590.00

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?

ANSWER:

The one time amount to be deposited into a savings accounting, to accumulate $50,000 at the end of a 7 year period with an interest rate of 10% would be $22.616.00.

Sevilla Topic 6, Exploration 8b

Consider the formula P = 67.38 x(1.026)t. If we let P represent the population of Mexico in year t where t is the number of years from 1980, confirm that this formula gives the same population values as those given in the table in Example 6.5.

a. Explain where the number 67.38 and the number 1.026 were obtained.

ANSWER:

The formula for present value is used:

fv = pv * (1+i)^n, where fv = future value; pv = present value; i = the increase rate (percentage of growth); and n =...