Week 5 Check Your Understanding

Determine the present values if $5,000 is received in the future (that is, at the end of each indicated time period) in each of the following situations:

• 5 percent for ten years 

Determine the present values if $5,000 is received in the future (that is, at the end of each indicated time period) in each of the following situations: 7 percent for seven years.

Determine the present values if $5,000 is received in the future (that is, at the end of each indicated time period) in each of the following situations: 9 percent for four years:

Assume you are planning to invest $5,000 each year for six years and will earn 10 percent per year. Determine the future value of this annuity if your first $5,000 is invested at the end of the first year.

Determine the present value now of an investment of $3,000 made one year from now and an additional $3,000 made two years from now, if the annual discount rate is 4 percent.

Assume a bank loan requires an interest payment of $85 per year and a principal payment of $1,000 at the end of the loan’s eight-year life. What would be the present value of this loan if it carried an 8.5 percent interest rate?

Assume a bank loan requires an interest payment of $85 per year and a principal payment of $1,000 at the end of the loan’s eight-year life. What would be the present value of this loan if it carried a 10 percent interest rate?

Assume a bank loan requires an interest payment of $85 per year and a principal payment of $1,000 at the end of the loan’s eight-year life. What would be the present value of the loan if the interest rate is 8 percent?