Question

Find the following values. Compounding/discounting occurs annually. Do not round intermediate calculations. Round your answers to the nearest cent. a. An initial $400 compounded for 10 years at 5%. $ b. An initial $400 compounded for 10 years at 10%. $ c. The present value of $400 due in 10 years at 5%. $ d. The present value of $2,515 due in 10 years at 10% and 5%. Present value at 10%: $ Present value at 5%: $

Answer 1

Answer:

$651.56

$1037.50

$245.57

$969.64

$1543.99

Explanation:

The formula for calculating future value:

FV = P (1 + r)^n

FV = Future value  

P = Present value  

R = interest rate  

N = number of years  

a. 400 x (1.05)^10 = $651.56

b. 400 x (1.1)^10 = $1037.50

formula for determining present value is

PV = f / (1 + r)^n

$400/ (1.05)^10 = $245.57

d. $2515 / (1.1)^10 = $969,64

$2515 / (1.05)^10 = $1543.99