Using the Following Table, What Is the Present Value of $15,000

question 101

Short Answer

Using the following table, what is the present value of $15,000 to be received in 10 years, if the market rate is 5% compounded annually? $$\begin{array} { | l | c | c | c | c | } \hline \text { Periods } & 5 \% & 6 \% & 7 \% & 10 \% \\\hline 1 & 0.95238 & 0.94340 & 0.93458 & 0.90909 \\\hline 2 & 0.90703 & 0.89000 & 0.87344 & 0.82645 \\\hline 3 & 0.86384 & 0.83962 & 0.81630 & 0.75132 \\\hline 4 & 0.82270 & 0.79209 & 0.76290 & 0.68301 \\\hline 5 & 0.78353 & 0.74726 & 0.71299 & 0.62092 \\\hline 6 & 0.74622 & 0.70496 & 0.66634 & 0.56447 \\\hline 7 & 0.71068 & 0.66506 & 0.62275 & 0.51316 \\\hline 8 & 0.67684 & 0.62741 & 0.58201 & 0.46651 \\\hline 9 & 0.64461 & 0.59190 & 0.54393 & 0.42410 \\\hline 10 & 0.61391 & 0.55840 & 0.50835 & 0.38554 \\\hline\end{array}$$

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Definitions:

Canadian Dollars

The currency of Canada, symbolized as CAD, and used throughout the country.

Exchange Rate

In international finance, the rate at which one currency can be traded for another. Spot rates are available for current trades. Forward rates are available for currency to be delivered in a specified period of time.

Spot Exchange Rate

The current exchange rate at which a foreign currency can be bought or sold for immediate delivery.

Forward Exchange Rate

The forward exchange rate is the agreed-upon exchange rate for a currency pair to be traded on a future date, used to hedge against currency risk.