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Calculate the present value of a deposit to receive single and multiple future payments.

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How much would you have to invest today to receive:

a. $15,000 in 8 years at 10 percent?

b. $20,000 in 12 years at 13 percent?

c. $6,000 each year for 10 years at 9 percent?

d. $50,000 each year for 50 years at 7 percent?

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Solution Summary

This solution provides formula, calculations and answers for the four time value of money problems.

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Here are your answers.

1. In this question and the following we need to use the following formula for compounded interest:

F = P*(1+r)^n
[The ^ symbol means "to the power of"]

where
P is the initial amount
F is the amount at the end of the investment
r is the interest rate in decimal form
n is the number of periods during which interest is compounded

In this question, we want to find P (the initial amount). We know thta F = 15000, r = 0.10 ...

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