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FIN200

Resolved Question:

FIN200                                &n bsp;                                                 Q2: If you require a 9% return on your investments, which would you prefer?


a.     $5,000 today

Present value of $5,000 at 9%

PV0 = 5000(PVIF6,0)
PV0 = 5000(1/((1.09)^0))
PV0 = 5000(1)
PV0 = $5,000


b.     $15,000 five years from today
     Present value of $15,000 received in 5 years at 9%:

FV5 = $15,000(PVIF9,5)
FV5 = 15000(1/((1.09)^5))
FV5 = 15000(0.6499313863)
FV5 = $9,748.97

c.     $1,000 per year for 15 years

Present Value $1,000 15 years at 9%

PV15 = 1000(PVIF9,15)
PV15 = 1000(0.275)
PV15 = $2,960.83
Submitted: 8 years ago.
Category: Homework
Expert:  Neo replied 8 years ago.
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