# Present value

As of July 16, 2007 the Prime Rate was 8.25% (Accessed from http://www.bloomberg.com/rates/)

Question 1. Using the above amount as the prime rate; If you put $5,000.00 into an account that earns the current Prime Rate as the interest rate compounded annually, how much will you have in 10 years? (Show your work. If you use Excel or a financial calculator, explain the steps you used to answer the question)

As of July 16, 2007, the 1-Year LIBOR rate was 5.4048% (Accessed from http:/www.moneycafe.com/library/libor.htm)

Question 2. Using the above amount as the 1-Year LIBOR rate, what is the present value of $100,000 that you will receive in 28 years if the current 1-Year LIBOR rate is used as the discount rate? (Show your work. If you use Excel or a financial calculator, explain the steps you used to answer the question

Question 3. briefly discuss how one can apply what was learned in this project to one's career or personal financial life.

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#### Solution Preview

Question 1. Using the above amount as the prime rate; If you put $5,000.00 into an account that earns the current Prime Rate

as the interest rate compounded annually, how much will you have in 10 years? (Show your work. If you use Excel or a financial calculator, explain the steps you used to answer the question)

Thus one has to calculate the compounded value of annuity

Here we have to find out the compounded value of annuity

F=A*((1+r)^n-1)/r

F=Future value, A= ...

#### Solution Summary

Present value is highlighted.