Given the cash flow below: Revenue,S 2,500 2,500 2,500 2,500 year 1 3 4 Calculate the present value (P) and the future value (F) for the following scenarios: a) The interest rate is 6% compounded daily b) The interest rate is 6% compounded monthly =) The interest rate is 6% compounded semi-annually d) Compare the results and explain the effect of compounding periods on the present and future values

Given the cash flow below: Revenue,S 2,500 2,500 2,500 2,500 year 1 3 4 Calculate the present value (P) and the future value (F) for the following scenarios: a) The interest rate is 6% compounded daily b) The interest rate is 6% compounded monthly =) The interest rate is 6% compounded semi-annually d) Compare the results and explain the effect of compounding periods on the present and future values

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

What uniform annual amount should be deposited each year in order to accumulate 1,000,000 at the end of the 10th annual deposit if money earns 10% interest?
You borrowed an amount of $15,000 and paid it $20,223 in 3 years. If the interest rate was compounded monthly, what is the nominal interest rate?
Provide answers in the form of a percentage to three decimal places . (a).What is the effective annual interest rate of a 4 % nominal annual interest rate compounded daily . (b).What is the effective annual interest rate of a 2 % nominal annual interest rate compounded weekly ? (c).What is the effective annual interest rate of a 7 % nominal annual interest rate quarterly ?
A trust will pay you $50,000 per year for 30 years starting 1 year from now. Assuming an interest rate of 5% compounding annually, what is the present value of these cash flows worth?
Carlos buys a bond that will pay him $1,000 after 3 years. It accumulates interest at an annual interest rate of 7% with continuous compounding. What is the value of this bond today? $810.58 $816.30 $425.78 $310.29
Planning for your wedding which would take place 10 years from now, you started to deposit from today a lump sum money every quarter for 4 years at nominal interest of 8% so that you can withdraw $50,000 at your wedding day.a) Sketch the cash flow diagram for the above financial plan.b) Calculate the amount of money that has to be deposited every quarter.
Q3