Solving Present Value and Future Value Problems - 75793

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armyguy

armyguy

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Price: $40
  • From: Business, Finance
  • Due on: Thu 20 Nov, 2014 (07:54pm)
  • Asked on: Fri 14 Nov, 2014
  • Due date has passed, but you can still Post Solution.
Description

It’s important to understand the fundamentals of finance. This entails understanding the time value of money. The value of a typical corporate bond is the present value of an annuity plus the present value of a lump sum. Thus, if you don’t understand how to calculate the present value of a lump sum or the present value of an annuity, it’s highly unlikely you’ll be able to determine the value of a typical corporate bond. Thus, in this Case Assignment, you will work through a variety of time value of money problems. 

Answer these problems and show your work: 

    1. Calculate the present value of the following lump sums:
      1. $100,000 to be received five years from now with a 5% annual interest rate
      2. $200,000 to be received 10 years from now with a 10% annual interest rate 
    2. Calculate the future value of the following lump sums:
      1. $100,000 if invested for five years at a 5% annual interest rate
      2. $200,000 if invested for 10 years at a 10% annual interest rate
    3. Calculate the present value of these ordinary annuities:
      1. $100,000 to be received each year for five years with a 5% annual interest rate
      2. $200,000 to be received each year for 10 years with a 10% annual interest rate
    4. Calculate the future value of these ordinary annuities:
      1. $100,000 if invested each year for five years at a 5% annual interest rate
      2. $200,000 if invested each year for 10 years at a 10% annual interest rate
    5. Calculate the present value of these perpetuities:
      1. $100,000 to be received each year forever with a 5% annual interest rate
      2. $200,000 to be received each year forever with a 10% annual interest rate 

Submit your assignment by creating a table in Word.  Interpret the results in Word.  Your complete assignment should be 3-4 pages. 

3 Solution for Solving Present Value and Future Value Problems
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