Suppose a wealthy university booster has pledged a superstar high-school sophomore volleyball recruit $1,000 as a gift the day they give a verbal commitment to play volleyball at the booster's alma mater. Assuming a constant interest rate of 8%, consider the present and future values of this gift, depending on when the recruit announces their commitment. Complete the first row of the following table by determining the value of the gift in one and two years with interest if you become engaged today and save the money. Date Received Today In 1 year In 2 years Present Value (Dollars) 1,000.00 Value in One Year Value in Two Years (Dollars) (Dollars) The prezant value of the gift is 1,000.00 1,000.00 Now complete the first column of the previous table by computing the present value of the gift if the recruit commits in one year or two years. et engaged in two year if the recruit commite in one than it is if

Suppose a wealthy university booster has pledged a superstar high-school sophomore volleyball recruit $1,000 as a gift the day they give a verbal commitment to play volleyball at the booster's alma mater. Assuming a constant interest rate of 8%, consider the present and future values of this gift, depending on when the recruit announces their commitment. Complete the first row of the following table by determining the value of the gift in one and two years with interest if you become engaged today and save the money. Date Received Today In 1 year In 2 years Present Value (Dollars) 1,000.00 Value in One Year Value in Two Years (Dollars) (Dollars) The prezant value of the gift is 1,000.00 1,000.00 Now complete the first column of the previous table by computing the present value of the gift if the recruit commits in one year or two years. et engaged in two year if the recruit commite in one than it is if

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Related questions

Q: Consider a uniform series of cash flows. The first cash flow of $10,000 occurs at time 10 and the…

A: A cash flow is the movement of funds over a predetermined time period into or out of the financial…

Q: Compound interest is a very powerful way to save for your retirement. Saving a little and giving it…

A: Formula for the future value of annuity is given as:

Q: What is the amount of interest earned on $2,000 for five years at 10% simple interest per year?

A: here we calculate the interest earned by simple interest so the calculation as follow-

Q: You have selected an account that yields 3.85% compounded monthly to invest the $4,051,948 that you…

A: The effective annual interest rate (EAR), also called the annual percentage yield, means the true…

Q: In one instance, a financial institution loaned you $60,000 for two years at an APR of 5.75% for…

A: First instance: Given , Principal = $60000 APR = 5.75% Time period = 2 years Thus, simple interest =…

Q: How many months will it take to pay off a $525 debt, with monthly payments of $15 at the end of each…

A: Mortgage installments are regular payments made by borrowers to lenders to repay a mortgage loan.…

Q: The average growth rate for a certain stock over the last 50 years is reported to be 12% compounded…

A: Present value is the value of investment in today's dollar. Future value is the value of investment…

Q: What rate of interest compounded annually would result in receipt of $22,110 in seven years from…

A: Compound interest will be computed by multiplying the present value amount by one plus the annual…

Q: How many years will it take an investment to triple if the interest rate is 8% compounded annually…

A: When an amount is compounded annually, interest keeps added on for the compounding year after year.

Q: Suppose Jorge Otego has set up his annuity due with a credit union. At the beginning of each month,…

A: Given that, Principal amount =P = $150 Rate of interest =r= 6% = 0.06 Interest rate compounded…

Q: Consider the following two cash flow series of payments: Series A is a geometric series increasing…

A: The present worth (PW) represents the current or present value of a series of future cash flows,…

Q: Suppose a wealthy university booster has pledged a superstar high-school sophomore hockey recruit…

A: The time value of money implies the concept that a sum of money is worth greater now than the same…

Q: A cash flow at time zero (now) of $14,551 is equivalent to another cash flow that is an EOY annuity…

A: A Cash flow at time zero (but now it is $14,551) is equivalent to another cash flow that is an…

Q: Suppose that an investor wishes to deposit an amount now so that in 30 years $1,000,000 will be in…

A: Let the amount deposited now be represented by P. Let F represents $1,000,000 which appears to be in…

Q: how much interest is included in the future value of an ordinary simple annuity of $750 paid every…

A: Future value (FV) is the value of a current asset at a future date based on an assumed rate of…

Question

Suppose a wealthy university booster has pledged a superstar high-school sophomore volleyball recruit $1,000 as a gift the day they give a verbal
commitment to play volleyball at the booster's alma mater. Assuming a constant interest rate of 8 %, consider the present and future values of this
gift, depending on when the recruit announces their commitment.
Complete the first row of the following table by determining the value of the gift in one and two years with interest if you become engaged today and
save the money.
Date Received
Today
In 1 year
In 2 years
Present Value
(Dollars)
1,000.00
Value in One Year
(Dollars)
1,000.00
Value in Two Years
(Dollars)
1,000.00
Now complete the first column of the previous table by computing the present value of the gift if the recruit commits in one year or two years.
The present value of the gift is,
if the recruit commits in one year than it is if you get engaged in two years.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1: Description of present value

VIEW

Step 2: Calculation of present value

VIEW

Solution

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps with 1 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Would love the help.
Compound interest is a very powerful way to save for your retirement. Saving a little and giving it time to grow is often more effective than saving a lot over a short period of time. To illustrate this, suppose your goal is to save $1 million by the age of 70. What amount of money will be saved by socking away $3,038 per year starting at age 23 with a 7% annual interest rate. Will you achieve your goal using the long-term savings plan? What amount of money will be saved by socking away $20,406 per year starting at age 48 at the same interest rate? Will you achieve your goal using the short-term savings plan? Click the icon to view the interest and annuity table for discrete compounding when i = 7% per year. C The future equivalent of the long-term savings plan is $ 1,000,184. (Round to the nearest dollar.) You will achieve your goal using the long-term savings plan. The future equivalent of the short-term savings plan is $. (Round to the nearest dollar.)
Suppose you borrow $5,000 at 7.25% interest for 14 months. What is the maturity value?
Lindsey plans to deposit her annual bonus into a savings account that pays 3% interest compounded annually. The size of her bonus increases by $1000 each year, and the initial bonus amount she will deposit at the end of year 1 is $2,500. a) Determine how much will be in the account immediately after the 6th deposit. b) What's the future value if she only plans to deposit her annual bonus for 8 years (the last deposit is at the end of year 8)? c) What's the future value if she only plans to deposit her annual bonus for 8 years (the last deposit is at the end of year 8), but also plans to skip the deposits at the end of years 3 and 6?
Tyrone wants to spend $15,000 on a new car three years from now. He opens a savings account and deposits $3,000 today. One year from now, he plans to deposit $3,000 in the account, and one year after that, he plans to deposit another $3,000. If the account earns 5% interest per year, how much additional money will Tyrone need three years from now to meet his $15,000 goal? [Enter your answer with no dollar sign or comma.].
A cash flow at time zero (now) of $7,386 is equivalent to another cash flow that is an EOY annuity of $2,100 over five years (starting at year 1). Each of these two cash-flow series is equivalent to a third series, which is a uniform gradient series. What is the value of G for this third series over the same five-year time interval? Assume that the cash flow at the end of year one is zero. Choose the correct answer below. A. $1,050 B. $702 OC. $949 OD. $1,195 OE. Not enough information given.
Melissa agrees to contribute $500 to the alumni fund at the end of each year for the next 4 years. Shannon wants to match Melissa's gift, but he wants to make a lump-sum contribution. If the current interest rate is 2.5% compounded annually, how much should Shannon cortribute to equal Melissa's gift? (Round your answer to the nearest cent.)
Please answer very soon will give rating surely
You borrowed $10,000 from a local bank, with the agreement that you will pay back the loan according to a graduated payment plan. If your first payment is set at $1,500, what would the remaining payment look like at a borrowing rate of 7% over five years? (the value of G approximately is...) $10,000 0 $1.500 20 30 4G
Suppose a wealthy university booster has pledged a superstar high-school sophomore hockey recruit $1,000 as a gift the day they give a verbal commitment to play hockey at the booster's alma mater. Assuming a constant interest rate of 11%, consider the present and future values of this gift, depending on when the recruit announces their commitment. Complete the first row of the following table by determining the value of the gift in one and two years with interest if you become engaged today and save the money. Date Received Today In 1 year In 2 years Present Value (Dollars) 1,000.00 Value in One Year (Dollars) 1,000.00 Value in Two Years (Dollars) 1,000.00 Now complete the first column of the previous table by computing the present value of the gift if the recruit commits in one year or two years. The present value of the gift is if the recruit commits in two years than it is if you get engaged in one year.
If $10,000 is invested in an account at United Mutual fund for 18 years, earning 10% compounded annually, what would its future worth be after 18 years?
Compound interest is a very powerful way to save for your retirement. Saving a little and giving it time to grow is often more effective than saving a lot over a short period of time. To illustrate this, suppose your goal is to save $1 million by the age of 70. What amount of money will be saved by socking away $3,038 per year starting at age 23 with a 7% annual interest rate. Will you achieve your goal using the long-term savings plan? What amount of money will be saved by socking away $20,406 per year starting at age 48 at the same interest rate? Will you achieve your goal using the short-term savings plan? Click the icon to view the interest and annuity table for discrete compounding when i = 7% per year. The future equivalent of the long-term savings plan is $. (Round to the nearest dollar.) C