Present and future values sample calculations
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Find the following values for a lump sum assuming semiannual compounding:
a. The future value of $500 invested at 8% for one year.
b. The future value of $500 invested at 8% for five years.
c. The present value of $500 to be received in one year when the opportunity cost rate is 8%.
d. The present value of $500 to be received in five years when the opportunity cost rate is 8%.
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Solution Summary
The solutions for the given problems depict the methodology to estimate the present/future value of single cash flow.
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Find the following values for a lump sum assuming semi-annual compounding:
a. The future value of $500 invested at 8% for one year.
Present Value=PV=$500
Number of periods=n=1*2=2 half years
Rate of return per period=r=8%/2=4% ...
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- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
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