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Finding the missing values

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A1. (PV and FV of single payments) Fill in the missing information:
PV FV r n
a. - 20 10% 10
b. 10 - 10% 10
c. 10 20 - 10
d. 10 20 10% -

A2. (PV and FV of single payments) Fill in the missing information:
PV FV r n
a. - 20 10% 15
b. 10 - 10% 15
c. 10 20 - 15
d. 15 20 10% -

A3. (PV and FV of single payments) Fill in the missing information:
PV FV r n
a. - 22,000 5.6% 3.0
b. 1,000 - 12.1% 5.5
c. 400 400 - 4.0
d. 25,000 50,000 7.75% -

A11. (Calculating the PV and FV of an annuity) Assume an ordinary annuity of \$500 at the end
of each of the next three years.
a. What is the present value discounted at 10%?
b. What is the future value at the end of year 3 if cash flows can be invested at 10%?

Solution Preview

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A1. (PV and FV of single payments) Fill in the missing information:
a.
PV=FV/(1+r)^n=20/(1+10%)^10=7.71

b.
FV=PV*(1+r)^n=10*(1+10%)^10=25.94

c.
r=(FV/PV)^(1/n)-1=(20/10)^(1/10)-1=7.18%

d.

FV=PV*(1+r)^n
20=10*(1+10%)^n
2=(1.1)^n
Taking Ln both sides
Ln2=nLn(1.1)
n=Ln(2)/Ln(1.1)=7.27

A2. (PV and ...

Solution Summary

Solution depicts the steps to find out the value of desired parameter in each case.

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