Share
Explore BrainMass

Increasing Time Value of Money

Please review the attached file.

Attachments

Solution Preview

Please see the attachment.

We have to calculate the future value of a single sum and so we use the FVIF table
1. PV = 40,000, period = 7 years and the rate is 12%
FV = 40,000 X FVIF (12%,7) = 40,000 X 2.2107 = $88,427.26
2. PV = 10,000, period = 22 quarters, rate = 16%/4 = 4% per quarter
FV = 10,000 X FVIF (4%,22) = 10,000 X 2.3699 = $23,699.19
3. PV = 6,000, period = 5 years and rate = 10%
FV = 6,000 X FVIF (10%,5) = 6,000 X 1.6105 = $9,663.06
Compound interest = 9,663.06 - 6,000 (principal) = $3,663.06

PV = 20,000, period = 4X2=8 semi annual and rate = 12%/2 = 6% semi annual
FV = 20,000 X FVIF (6%,8) = 20,000 X 1.5938 = $31,876.96

We use the PVIF table to find the PV of a single sum
1. FV = 30,000, period = 5 years and rate = 12%
PV = 30,000 X PVIF (12%,5) = 30,000 X 0.5674 = $17,022.81
2. FV = 8,000, period = 18 quarters, rate = 16%/4 = 4% per ...

Solution Summary

The solution explains some questions relating to present value, future value, annuity, number of cash flows

$2.19