1.) Find the following values using the equations and then a financial calculator. Compounding/discounting occurs annually. Do not round intermediate calculations. Round your answers to the nearest cent.

An initial $600 compounded for 1 year at 10%. $___________

An initial $600 compounded for 2 years at 10%. $__________

The present value of $600 due in 1 year at a discount rate of 10%. $___________

The present value of $600 due in 2 years at a discount rate of 10%. $__________

2.) Find the following values. Compounding/discounting occurs annually. Do not round intermediate calculations. Round your answers to the nearest cent.

a. An initial $600 compounded for 10 years at 4%. $________

b. An initial $600 compounded for 10 years at 8%. $________

c. The present value of $600 due in 10 years at 4%. $_________

d. The present value of $1,755 due in 10 years at 8% and 4%.

Present value at 8%: $________

Present value at 4%: $________

e. Define present value (choose one)

1. The present value is the value today of a sum of money to be received in the future and in general is less than the future value.
2. The present value is the value today of a sum of money to be received in the future and in general is greater than the future value.
3. The present value is the value today of a sum of money to be received in the future and in general is equal to the future value.
4. The present value is the value in the future of a sum of money to be received today and in general is less than the future value.
5. The present value is the value in the future of a sum of money to be received today and in general is greater than the future value.

3.) How are present values affected by interest rates?