Use the Following Tables to Calculate the Present Value of a $25,000

question 172

Essay

Use the following tables to calculate the present value of a $25,000, 7%, 5-year bond that pays $1,750 ($25,000 × 7%) interest annually, if the market rate of interest is 7%
Present Value of $1 at Compound Interest $$\begin{array} { | l | c | c | c | c | } \hline \text { Periods } & 5 \% & 6 \% & 7 \% & 10 \% \\\hline 1 & 0.95238 & 0.94340 & 0.93458 & 0.90909 \\\hline 2 & 0.90703 & 0.89000 & 0.87344 & 0.82645 \\\hline 3 & 0.86384 & 0.83962 & 0.81630 & 0.75132 \\\hline 4 & 0.82270 & 0.79209 & 0.76290 & 0.68301 \\\hline 5 & 0.78353 & 0.74726 & 0.71299 & 0.62092 \\\hline 6 & 0.74622 & 0.70496 & 0.66634 & 0.56447 \\\hline 7 & 0.71068 & 0.66506 & 0.62275 & 0.51316 \\\hline 8 & 0.67684 & 0.62741 & 0.58201 & 0.46651 \\\hline 9 & 0.64461 & 0.59190 & 0.54393 & 0.42410 \\\hline 10 & 0.61391 & 0.55840 & 0.50835 & 0.38554 \\\hline\end{array}$$ ​
Present Value of Annuity of $1 at Compound Interest $$\begin{array} { | l | c | c | c | c | } \hline \text { Periods } & 5 \% & 6 \% & 7 \% & 10 \% \\\hline 1 & 0.95238 & 0.94340 & 0.93458 & 0.90909 \\\hline 2 & 1.85941 & 1.83339 & 1.80802 & 1.73554 \\\hline 3 & 2.72325 & 2.67301 & 2.62432 & 2.48685 \\\hline 4 & 3.54595 & 3.46511 & 3.38721 & 3.16987 \\\hline 5 & 4.32948 & 4.21236 & 4.10020 & 3.79079 \\\hline 6 & 5.07569 & 4.91732 & 4.76654 & 4.35526 \\\hline 7 & 5.78637 & 5.58238 & 5.38929 & 4.86842 \\\hline 8 & 6.46321 & 6.20979 & 5.97130 & 5.33493 \\\hline 9 & 7.10782 & 6.80169 & 6.51523 & 5.75902 \\\hline 10 & 7.72174 & 7.36009 & 7.02358 & 6.14457 \\\hline\end{array}$$

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