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Compute the Present Value in Each of the Following Problems

question 34

Short Answer

Compute the present value in each of the following problems. Use Tables 16-1A&B or 16-2A&B or a calculator.

a.How much must you invest today at 12% compounded monthly to have $10,000 in 2 years?


b.Compute the amount that you must deposit today into an account that pays 5% compounded quarterly to have $15,000 in 5 years.


Definitions:

Constant Rate

A fixed value, often used in calculations involving growth or decay, where the rate does not change over time.

Discount Rate

The interest rate charged by central banks on loans they provide to commercial banks.

Growth Dividend Policy

A strategy where a company intends to pay out increasing dividends over time as it reinvests profits to fuel growth and expansion.

Eps Growth Rate

The annual rate at which a company's earnings per share (EPS) has grown over a specified time period.

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