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Present value

1) What's the present value of:

a. $9,000 in 7 years at 8 percent?

b. $20,000 in 5 years at 10 percent?

c. $10,000 in 25 years at 6 percent?

d. $1,000 in 50 years at 16 percent?

2) Say you invest $9,000 today, how much will you have:

a. In 2 years at 9 percent?

b. In 7 years at 12 percent?

c. In 25 years at 14 percent?

d. In 25 years at 14 percent (compounded semiannually)?

3) How much would you have to invest today to receive:

a. $15,000 in 8 years at 10 percent?

b. $20,000 in 12 years at 13 percent?

c. $6,000 each year for 10 years at 9 percent?

d. $50,000 each year for 50 years at 7 percent?

4) If you invest $2,000 a year in a retirement account, how much would you have:

a. In 5 years at 6 percent?

b. In 20 years at 10 percent?

c. In 40 years at 12 percent?

5) John Smith will receive $8,500 a year for the next 15 years from her trust. If a
7 percent interest rate is applied, what is the current value of the future payments?

6) Bob Jones will receive $175,000 in 50 years. His friends are very jealous of him. If the funds are discounted back at a rate of 14 percent, what is the present value of his future "pot of gold"?

Solution Preview

) What's the present value of:

a. $9,000 in 7 years at 8 percent?

b. $20,000 in 5 years at 10 percent?

c. $10,000 in 25 years at 6 percent?

d. $1,000 in 50 years at 16 percent?

2) Say you invest $9,000 today, how much will you have:

a. In 2 years at 9 percent?

b. In 7 years ...

Solution Summary

This helps in computation of current value of the future payments

$2.19