Assuming interest compounds annually at 3%, what is the present value of $12,000 to be received...

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Assuming interest compounds annually at 3%, what is the present value of $12,000 to be received four years from now? 2. A company will receive a cash payment of $4,000 every six months for the next five years. Assuming an annual interest rate of 6%, what is the present value of those future cash receipts? 3. As a contest winner, you are given two alternatives: 1. Receive $1,000,000 today; or 2. Receive 11 annual payments of $100,000 starting at the end of this year. Assuming interest compounds annually at 2%, which alternative has the highest present value? Assuming interest compounds annually at 3%, what is the present value of $12,000 to be received four years from now? 2. A company will receive a cash payment of $4,000 every six months for the next five years. Assuming an annual interest rate of 6%, what is the present value of those future cash receipts? 3. As a contest winner, you are given two alternatives: 1. Receive $1,000,000 today; or 2. Receive 11 annual payments of $100,000 starting at the end of this year. Assuming interest compounds annually at 2%, which alternative has the highest present value?

Answer rating: 100% (QA)

1 To calculate the present value of 12000 to be received four years from now we can use the formula for the present value of a future amount PV FV 1 r... View the full answer