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    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 Preview

    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% ...

    Solution Summary

    The solutions for the given problems depict the methodology to estimate the present/future value of single cash flow.

    $2.19