Ch $05-$ End$-$of$-$Chapter Problems $-$ Time Value of Money

Back to Assignment

Attempts $3$

$2$

Keep the Highest $\frac{3}{7}$

$3.$ Problem $5\mathrm{.}10($Present and Future Values for Different Interest Rates$)$

C

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

a$.$ An initial $$700$ compounded for $10$ years at $5\%.$

$ $$

b$.$ An initial $$700$ compounded for $10$ years at $10\%.$

$ $$

c$.$ The present value of $$700$ due in $10$ years at $5\%.$

$ $$

d$.$ The present value of $$1,770$ due in $10$ years at $10\%$ and $5\%.$

Present value at $10\%$:$ $$

Present value at $5\%$ : $ $$

e$.$ Define present value.

I. 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.

II$.$ 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.

III. 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.

IV$.$ 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.

V$.$ The present value is the value in the future of a sum of money to be recelved today and in general is greater than the future value.

$$

How are present values affected by interest rates?

$-$Select$-$