Calculate the net present value of a car down payment.
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Calculate the present value of:
a. A car down payment of $5,000 that will be required in five years, assuming an interest rate of 10%.
b. A lottery prize of $10 million to be paid at the rate of $500,000 per year for 20 years, assuming an interest rate of 7%.
What happens to the above calculations when the interest rate is 0%?
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Solution Summary
Solution explains how to calculate the given present value problems
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Calculate the present value of:
a. A car down payment of $5,000 that will be required in five years, assuming an interest rate of 10%.
Present value= Future value /(1+rate of interest)^ duration
=5000/(1+10%)^5
$3,104.61
b. A lottery prize of $10 million to be paid at the rate of $500,000 per year ...
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