Principles of Economics, 7th Edition (MindTap Course List)
Principles of Economics, 7th Edition (MindTap Course List)
7th Edition
ISBN: 9781285165875
Author: N. Gregory Mankiw
Publisher: Cengage Learning
Question
Book Icon
Chapter 27, Problem 1QR
To determine

Calculation of present value of money.

Expert Solution & Answer
Check Mark

Explanation of Solution

The present value of $200 can be calculated as follows:

Present value=Future value(1+Interest)2=200(1+0.07)10=2001.9672=101.67

The present value is $101.67.

The present value of $300 can be calculated as follows:

Present value=Future value(1+Interest)2=300(1+0.07)20=3003.8697=77.53

The present value is $77.53.

Economics Concept Introduction

Concept introduction:

Present value: Thepresent value refers to the today’s value of the future amount that adjusted with the existing interest rate.

Want to see more full solutions like this?

Subscribe now to access step-by-step solutions to millions of textbook problems written by subject matter experts!
Students have asked these similar questions
Angela puts $5,000 in a savings account that pays 5 percent per year. The future value of her money one year from now is $ As the interest rate (Enter your response as a whole number.) the future value of Angela's $5,000 savings will increase.
Akhisha wanted to buy a cell phone which will have a price of P13,000 for 90 days from now due to the increase in prices of 12 percent simple interest. What is the present worth of a cell phone?  a. P15,621 b. P12,621 c. P13,621 d. P14,621
In five years, you want to be able to buy a new car for $30,000. If the interest rate is 3 percent a year, what is the present value of this sum?     A. $30,000.00   B. $25,500.00   C. $25,878.26   D. $34,778.22
Knowledge Booster
Background pattern image
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
Essentials of Economics (MindTap Course List)
Economics
ISBN:9781337091992
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Text book image
Brief Principles of Macroeconomics (MindTap Cours...
Economics
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Text book image
Microeconomics A Contemporary Intro
Economics
ISBN:9781285635101
Author:MCEACHERN
Publisher:Cengage
Text book image
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Text book image
Microeconomics
Economics
ISBN:9781337617406
Author:Roger A. Arnold
Publisher:Cengage Learning