For problem 14.7 from your text, present value functions were used to calculate and graph the...
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For problem 14.7 from your text, present value functions were used to calculate and graph the inflation rates 3%, 6%, and 8% per year that show the current value today. Refer to the image below. Answer the follow questions about the table and graph. Year 1 2 3 f=3% BU M HUM CV in Year 0, $ f=6% HUM $0. $0 50 888 Current Value at Differenti $0 f-8% -$13,000 $0-PV(8%,A4,0,$F$3) $0-PV(8%, A5,0,$F$3) SO-PV(8%,A6,0,$F$3) a) You have $100,000 in your project account today, You plan to leave the money in the account for 10 years. You assume an inflation rate of 3% during that time. What is the present value of the account calculated by the equation Present Value = PV(rate, nper, PMT, FV (rate, nper, PMT, PV))? (2 points) What is the net effect of this present value equation? (3 pts) b) If -2% is the cost of fees for the account, how much of the $100,000 will remain in the account after paying fees for 50 years? Hint: what is the future value of $100,000 at -2% for 50 years? (4 pts) c) What is the result of the following calculation, Future Value = FV (x %. y.0, PV (x%, y, 0, 2)) where x. y, and z are constants? (4 pts). d) Draw a cash flow diagram that contains labeled cash flows and years. Label the cash flows with subscripts that differentiate between time and the variables given in the equation. For example, PIA is the present worth of a series of payments A in year 1. (4 pts) For problem 14.7 from your text, present value functions were used to calculate and graph the inflation rates 3%, 6%, and 8% per year that show the current value today. Refer to the image below. Answer the follow questions about the table and graph. Year 1 2 3 f=3% BU M HUM CV in Year 0, $ f=6% HUM $0. $0 50 888 Current Value at Differenti $0 f-8% -$13,000 $0-PV(8%,A4,0,$F$3) $0-PV(8%, A5,0,$F$3) SO-PV(8%,A6,0,$F$3) a) You have $100,000 in your project account today, You plan to leave the money in the account for 10 years. You assume an inflation rate of 3% during that time. What is the present value of the account calculated by the equation Present Value = PV(rate, nper, PMT, FV (rate, nper, PMT, PV))? (2 points) What is the net effect of this present value equation? (3 pts) b) If -2% is the cost of fees for the account, how much of the $100,000 will remain in the account after paying fees for 50 years? Hint: what is the future value of $100,000 at -2% for 50 years? (4 pts) c) What is the result of the following calculation, Future Value = FV (x %. y.0, PV (x%, y, 0, 2)) where x. y, and z are constants? (4 pts). d) Draw a cash flow diagram that contains labeled cash flows and years. Label the cash flows with subscripts that differentiate between time and the variables given in the equation. For example, PIA is the present worth of a series of payments A in year 1. (4 pts)
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