Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Problem 4-3 Calculating Present Values
|
For each of the following, compute the |
Transcribed Image Text:Problem 4-3 Calculating Present Values
For each of the following, compute the present value. (Do not round intermediate
calculations and round your answers to 2 decimal places, e.g., 32.16.)
Present Value
Years
14
5
30
ww
35
Interest Rate
14
15
8
Future value
15,851
55,557
890,073
554,164
Expert Solution
Step 1
Present value is the current value of a future sum of money or stream of cash flows, discounted at an appropriate rate of return. It is the amount of money that would need to be invested today, at a certain interest rate, to yield a future sum of money or cash flows. The concept of present value is used in various financial calculations, including calculating the value of an investment, determining the price of a bond or a stock, and evaluating the profitability of a project.
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