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# Future Value of a Single Payment

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If you deposit \$10,000 in a bank account that pays 10% interest annually, how much will be in your account after 5 years?

Explain how to apply discounted cash flow techniques to determine the value of money.

#### Solution Summary

This solution explains and calculates how to determine the future value of a single payment, as well as how to determine the value of money by applying discounted cash flow techniques.

\$2.19
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## Calculating present and future values..

Q12 What is the economic value today of each of the following payment streams if money can earn 7.5%.

a. \$1000, \$3000, and \$2000 due in one, three, and five months, respectively.

b. Two \$3000 payments due two and four months from now.

Q14 Ninety days ago Stella signed an agreement with Manon requiring her to make three payments of \$400 plus interest 90, 150, and 210 days, respectively, from the date of the agreement. Each payment was to include interest on the \$400 principal at the rate of 13.5% from the date of the agreement. Stella now wants Manon to renegotiate the agreement and accept a single payment 30 days from now, instead of the three scheduled payments. What payment should Manon require in the new agreement if money is worth 8.5%?

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