For each of the following, compute the present value (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)):

For each of the following, compute the present value (Do not round intermediate calculations and round your final answers to 2 decimal places. (e.g., 32.16)):

 

Present Value	Years		Interest Rate			Future value
$	14		8	%		$	16,451
	5		14				61,557
	30		15				896,073
	35		8				560,164

Explanation:

To find the PV of a lump sum, we use:

 

PV = FV / (1 + r)t

PV = $16,451 / (1.08)14	=	$	5,600.92
PV = $61,557 / (1.14)5	=	$	31,970.78
PV = $896,073 / (1.15)30	=	$	13,533.44
PV = $560,164 / (1.08)35	=	$	37,886.44

Calculator Solution:

Note: Intermediate answers are shown below as rounded, but the full answer was used to complete the calculation.

Enter

14

8%

$16,451

N

I/Y

PV

PMT

FV

Solve for

$5,600.92

Enter

5

14%

$61,557

N

I/Y

PV

PMT

FV

Solve for

$31,970.78

Enter

30

15%

$896,073

N

I/Y

PV

PMT

FV

Solve for

$13,533.44

Enter

35

8%

$560,164

N

I/Y

PV

PMT

FV

Solve for

$37,886.44