Marshall, McManus, & Viele text
Ch. 6, problem P6-26 a, b, c, and d only
Present value calculations. Using a present value table, your calculator, or a computer
program present value function, answer the following questions:
Required:
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%?
b. What is the present value of $15,000 to be paid at the end of 20 years, using
an interest rate of 18%?
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?
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?

Solution Summary

This solution provides a detailed explanation on how to calculate the present value cash payments or deposits using present value factors.

5. (Computation of Future Values andPresentValues) Using the appropriate interest table, answer each of the following questions. (Each case is independent of the others.)
a. What is the future value of $7,000 at the end of 5 periods at 8% compounded interest?
b. What is the presentvalue of $7,000 due 8 periods hence, disc

What is the presentvalue of $10,000 received
a. 12 years from today when the interest rate is 4% per year?
b. 20 years from today when the interest rate is 8% per year?
c. 6 years from today when the interest rate is 2% per year?

See attached file.
Please refer to tab 3-16 to solve and explain.
A 10-year U.S. Treasury bond with a face value of $10,000 pays a coupon of 5.5%
(2.75% of face value every six months). The semiannually compounded interest rate
is 5.2% (a six-month discount rate of 5.2/2 = 2.6%).
a. What is the presentvalue of

Which of the following statements is false?
a. If the discount rate (or interest) rate is positive, the future value of an unexpected series of payments will always exceed the presentvalue of the same series.
b. To increase present consumption beyond present income normally requires either the payment of interest or else an

Please show how answer is obtained
The presentvalue of $20,000 (rounded to the nearest dollar) to be received two years from today, assuming an earnings rate of 12% is:
a. $17,860
b. $15,940
c. $14,240
d. $12,720