Using the appropriate tables in the text, Required: Determine: a. the future value of a single cash

Question:

Using the appropriate tables in the text,

Required:

Determine:

a. the future value of a single cash flow of $5,000 that earns 7 percent interest compounded annually for 10 years.

b. the future value of an annual annuity of 10 cash flows of $500 each that earns 7 percent compounded annually.

c. The present value of $5,000 to be received 10 years from now, assuming that the interest (discount) rate is 7 percent per year.

d. The present value of an annuity of $500 per year for 10 years for which the interest (discount) rate is 7 percent per year and the first cash flow occurs one year from now.

Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,... Future Value
Future value (FV) is the value of a current asset at a future date based on an assumed rate of growth. The future value (FV) is important to investors and financial planners as they use it to estimate how much an investment made today will be worth...