Using the appropriate tables in the text, Required: Determine: a. the present value of $1,200 to be

Question:

Using the appropriate tables in the text,

Required:

Determine:

a. the present value of $1,200 to be received in seven years, assuming that the interest (discount) rate is 8 percent per year.

b. the present value of an annuity of seven cash flows of $1,200 each (one at the end of each of the next seven years) for which the interest (discount) rate is 8 percent per year.

c. the future value of a single cash flow of $1,200 that earns 8 percent per year for seven years.

d. the future value of an annuity of seven cash flows of $1,200 each (one at the end of each of the next seven years), assuming that the interest rate is 8 percent per year.

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...