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Present Value Compute the present value of a $2,000 deposit in year 1 and another $1,500
deposit at the end of year 3 if interest rates are 10 percent.
Solution
CALCULATION OF PRESENT VALUE :
_______________________________________________________________
YEARÂ Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â DEPOSITÂ Â Â Â Â Â Â Â Â Â Â Â
PVF @ 10%Â Â Â Â Â Â Â Â Â Â Â Â Â Â PRESENT VALUE
________________________________________________________________
1Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $
2,000Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 0.909Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â
        1818.00
3Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â $
1500Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â 0.751Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â Â
         1126.50_________
Total Present
Value                                    Â
                           2944.50_________
Present Value Compute the present value of a $2-000 deposit in year 1.docx

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Present Value Compute the present value of a $2-000 deposit in year 1.docx

  • 1. Present Value Compute the present value of a $2,000 deposit in year 1 and another $1,500 deposit at the end of year 3 if interest rates are 10 percent. Solution CALCULATION OF PRESENT VALUE : _______________________________________________________________ YEAR                    DEPOSIT            PVF @ 10%              PRESENT VALUE ________________________________________________________________ 1                            $ 2,000                0.909                           1818.00 3                            $ 1500                 0.751                            1126.50_________ Total Present Value                                                                2944.50_________