Explore BrainMass
Share

Present and future values

This content was STOLEN from BrainMass.com - View the original, and get the solution, here!

(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%?

© BrainMass Inc. brainmass.com September 23, 2018, 12:39 am ad1c9bdddf - https://brainmass.com/business/the-time-value-of-money/269630

Solution Preview

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.

$2.19