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    (Present and future values) Assume that you are starting with an investment of $10,000.

    a. What is the future value of the investment after one year if it earns 10% per year? What is the present value of this future value discounted at 10%?

    b. What is the future value of the investment after one year if it earns 20% per year? What is the present value of this future value discounted at 10%?

    c. What is the future value of the investment after one year if it earns 10% per year? What is the present value of this future value discounted at 20%?

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    Present Value & Future Value 2

    (Present and future values) Assume that you are starting with an investment of $10,000.

    Future Value= Present Value x (1+ interest rate ) ^ time
    Present Value = Future Value / (1+ discount rate ) ^ time

    a. What is the future value of the investment after one year if it earns 10% per year? What is the present value of this future value discounted at 10%?

    Investment= $10,000
    annual interest ...

    Solution Summary

    Determines present value and future value.

    $2.49

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