Present Value Computations Assuming that money is worth 10%, compute the present
ID: 2792737 • Letter: P
Question
Present Value Computations
Assuming that money is worth 10%, compute the present value of
Round answers to the nearest whole number.
1. $11,000 received 15 years from today.
$Answer
2. The right to inherit $2,000,000 14 years from now.
$Answer
3. The right to receive $5,000 at the end of each of the next six years.
$Answer
4. The obligation to pay $7,000 at the end of each of the next 10 years.
$Answer
5. The right to receive $9,000 at the end of the 7th, 8th, 9th, and 10th years from today.
$Answer
Explanation / Answer
Question
Amount
PV factor
PV of amount
1
11000
0.2394
2633.31
2
2000000
0.2633
526662.51
PV factor of annuity
3
5000
3.79079
18953.93
4
7000
6.1446
43011.97
Year
PV factor
PV of amount
5
9000
7
0.5132
4618.423064
9000
8
0.4665
4198.566422
9000
9
0.4241
3816.878565
9000
10
0.3855
3469.889605
Total
16103.75766
Question
Amount
PV factor
PV of amount
1
11000
0.2394
2633.31
2
2000000
0.2633
526662.51
PV factor of annuity
3
5000
3.79079
18953.93
4
7000
6.1446
43011.97
Year
PV factor
PV of amount
5
9000
7
0.5132
4618.423064
9000
8
0.4665
4198.566422
9000
9
0.4241
3816.878565
9000
10
0.3855
3469.889605
Total
16103.75766