The Federal Reserve wants to increase the money supply in the United States. What is the Federal Reserve likely to do to accompl
2 answers:
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Answer:
a)Present value [X] = $46,099.06
Present value[Y] = $40,066.40
b) Present value[X] = $30,667.51
Present value[Y] = $30,897.73
Explanation:
Present value of an ordinary annuity is calculated as follows:
where PMT = the value of the individual payments in each period
i = the interest rate that would be compounded in each compounding period
n = the number of payment periods
a) Present value of X given PMT = 6,200; i=0.04; n = 9 is calculated as follows:
Present value[X] = = $46,099.06
Present value of Y given PMT = 9,000; i=0.04; n = 5 is calculated as follows:
Present value[Y] = = $40,066.40
b) if the discount rate is 14% and all other variables do not change
Present value[X] = = $30,667.51
Present value[Y] = = $30,897.73