PRESENT AND FUTURE VALUES FOR DIFFERENT INTEREST RATES

Find the following values. Compounding/discounting occurs annually. Round your answers to the nearest cent.

a. An initial $800 compounded for 10 years at 7%.

$

b. An initial $800 compounded for 10 years at 14%.

$

c. The present value of $800 due in 10 year at 7%.

$

d. The present value of $2,150 due in 10 years at 14%.

$

e. The present value of $2,150 due in 10 years at 7%.

$

Define present value.

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.

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.

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.

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.

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.

***How are present values affected by interest rates?