Assume that you are going to receive $590,000 in 10 years. The current market rate of...

 

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Assume that you are going to receive $590,000 in 10 years. The current market rate of interest is 11%. a. Using the present value of $1 table in Exhibit 5, determine the present value of this amount compounded annually. Round to the nearest whole dolar. 207,788. X b. Why is the present value less than the $590,000 to be received in the future? The present value is less due to the compounding of interest over the 10 years. 4%% 5% 5% 6% 7% 10% 11% 12% 13% Periods 4% 0.94340 0.93097 0.93458 0.90909 0.90090 0.89286 088496 0.96154 0.956940 0.95238 0.94787 0.89000 0.88166 0.82645 0.81162 079719 078315 0.92456 0.915730 0.90703 0.89845 0.87344 0.85161 0.82785 0.81630 0.75131 0.73119 071178 0.69305 0.83962 0.88900 0.85480 0876300 0.86384 0.82270 0.79209 0.77732 0.76290 0.68301 0.65873 0.63552 061332 0.80722 76513 0.838560 0.74726 0.72988 0.71299 0.62092 0.59345 0.56743 as4276 0.82193 0.802450 0.78353 0.53464 048032 0.50663 O45235 0.68533 066634 a56447 0.70496 0.66506 6. 0.79031 0.767900 0.74622 0.72525 0.71068 0.68744 0.64351 0.62275 as1316 0.48166 042506 7. 075992 0.734830 0.62741 0.60423 058201 046651 O43393 0.40388 037616 073069 0.703190 0.67684 065160 0.61763 0.59190 0.56735 0.54393 042410 039092 0.36061 033288 0.70259 0672900 0.64461 0.55839 0.53273 050835 0.38554 0.35218 032197 0.29459 10 0.67556 0643930 0.61391 058543 Assume that you are going to receive $590,000 in 10 years. The current market rate of interest is 11%. a. Using the present value of $1 table in Exhibit 5, determine the present value of this amount compounded annually. Round to the nearest whole dolar. 207,788. X b. Why is the present value less than the $590,000 to be received in the future? The present value is less due to the compounding of interest over the 10 years. 4%% 5% 5% 6% 7% 10% 11% 12% 13% Periods 4% 0.94340 0.93097 0.93458 0.90909 0.90090 0.89286 088496 0.96154 0.956940 0.95238 0.94787 0.89000 0.88166 0.82645 0.81162 079719 078315 0.92456 0.915730 0.90703 0.89845 0.87344 0.85161 0.82785 0.81630 0.75131 0.73119 071178 0.69305 0.83962 0.88900 0.85480 0876300 0.86384 0.82270 0.79209 0.77732 0.76290 0.68301 0.65873 0.63552 061332 0.80722 76513 0.838560 0.74726 0.72988 0.71299 0.62092 0.59345 0.56743 as4276 0.82193 0.802450 0.78353 0.53464 048032 0.50663 O45235 0.68533 066634 a56447 0.70496 0.66506 6. 0.79031 0.767900 0.74622 0.72525 0.71068 0.68744 0.64351 0.62275 as1316 0.48166 042506 7. 075992 0.734830 0.62741 0.60423 058201 046651 O43393 0.40388 037616 073069 0.703190 0.67684 065160 0.61763 0.59190 0.56735 0.54393 042410 039092 0.36061 033288 0.70259 0672900 0.64461 0.55839 0.53273 050835 0.38554 0.35218 032197 0.29459 10 0.67556 0643930 0.61391 058543

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Q1 Present value is 207786 Explanation Your answer 207788 is approximatel... View the full answer