Exercise 6.15

Present value calculations Using a present value table, your calculator, or a computer program present value function, calculate the present value of:

a. A car down payment of $9,000 that will be required in two years, assuming an interest rate of 10%.

b. A lottery prize of $18 million to be paid at the rate of $900,000 per year for 20 years, assuming an interest rate of 10%.

c. The same annual amount as in part b, but assuming an interest rate of 14%.

d. A financing lease obligation that calls for the payment of $24,000 per year for 10 years, assuming a discount rate of 8%.