Present value (with changing interest rates).Marty has been offered an injury settlement of

$13 comma 000

payable in

3

years. He wants to know what the present value of the injury settlement is if his opportunity cost is

5

%.

(The opportunity cost is the interest rate in this problem.) What if the opportunity cost is

8

%?

What if it is

11.5

%?

If Marty's opportunity cost is

5

%,

what is the present value of the injury settlement?

$nothing

(Round to the nearest cent.)

Present

value.

The State of Confusion wants to change the current retirement policy for state employees. To do so, however, the state must pay the current pension fund members the present value of their promised future payments. There are

200 comma 000

current employees in the state pension fund. The average employee is

22

years away from retirement, and the average promised future retirement benefit is

$450 comma 000

per employee. If the state has a discount rate of

6

%

on all its funds, how much money will the state have to pay to the employees before it can start a new pension plan?

How much money will the state have to pay to the employees before it can start a new pension plan?

$nothing

(Round to the nearest dollar.)

Present

value.

Prestigious University is offering a new admission and tuition payment plan for all alumni. On the birth of a child, parents can guarantee admission to Prestigious if they pay the first year's tuition. The university will pay an annual rate of return of

6.5

%

on the deposited tuition, and a full refund will be available if the child chooses another university. The tuition is expected to be

$14 comma 000

a year at Prestigious

18

years from now. What would parents pay today if they just gave birth to a new baby and the child will attend college in

18

years? How much is the required payment to secure admission for their child if the interest rate falls to

4

%?

What would parents pay today if they just gave birth to a new baby and the child will attend college in

18

years?

$nothing

(Round to the nearest cent.)

Present

value.

You are currently in the job market. Your dream is to earn a six-figure salary

($150 comma 000

).

You hope to accomplish this goal within the next

30

years. In your field, salaries grow at

3.25

%

per year. What starting salary do you need to reach this goal?

What starting salary do you need to reach this goal?

$nothing

(Round to the nearest cent.)

nterest rates or discount

rates.

Fill in the interest rates for the following table,

LOADING...

, using one of the three methods below:

a.Use the interest rate formula,

r equals left parenthesis StartFraction FV Over PV EndFraction right parenthesis Superscript StartFraction 1 Over n EndFraction Baseline minus 1

.

b.Use the TVM keys from a calculator.

c.Use the TVM function in a spreadsheet.

Present Value	Future Value	Number of Periods	Interest Rate
$423.64

$1 comma 926.62

16

nothing

% (Round to two decimal places.)