Present Value: The value of today’s amount to be paid or received in the future at a compound interest rate is called as present value. The following formula is used to calculate the present value of an amount: Present value of an amount = Future value ( 1 + interest rate ) number of periods Future Value: The future value is value of present amount compounded at an interest rate until a particular future date. The future value of an amount is calculated by using the following formula: Future value of an amount = Present value × ( 1+ Interest rate ) Number of periods To solve: The missing value for each of the following situations involving single amounts, assuming the interest compounded annually.

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Chapter 6, Problem 6.6E

To determine

Present Value:

The value of today’s amount to be paid or received in the future at a compound interest rate is called as present value. The following formula is used to calculate the present value of an amount:

Present value of an amount = Future value(1 + interest rate)number of periods

Future Value: The future value is value of present amount compounded at an interest rate until a particular future date. The future value of an amount is calculated by using the following formula:

Future value of an amount = Present value×(1+ Interest rate)Number of periods

To solve: The missing value for each of the following situations involving single amounts, assuming the interest compounded annually.

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