Time value of money
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Find the following values, using equations. Disregard rounding the differences.
A) an initial $500 compounded for 1 yr at 6%
B) an initial $500 compounded for 2 yrs at 6%
C) The present value of $500 due in 1 yr at a discount rate of 6%
D) The present value of $500 due in 2 years at a discounted rate of 6%
E) An initial $500 compounded for 10 years at 6%
F) An initial $500 compounded for 10 years at 12%
G) The present value of $500 due in 10 years at a 6% discounted rate.
H) The present value of $1552.90 due in 10 years at a 12% discount rate and at a 6$ rate. Give a verbal definition of the term present value and illustrate it using a time line with data from E-H. Explain why present values are dependent upon interest rates.
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