What is the present value

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Reference no: EM133396124

Question 1: Suppose that you are going to receive a single payment of $100 in 5 years. If the discount rate is 5%, what is the present value? Remember to round off to the nearest dollar.

Question 2: Suppose that you are going to receive the $100 in 5 years, but the discount rate is 10% instead of 5%. What is the present value?

Question 3: Suppose someone offers you an investment where you pay $10,000 today and you get back $3,000 per year for 4 years (with the first payment in 1 year). If the discount rate is 7%, what is the NPV (net present value)?

NOTE: You PAY $10,000 and GET the $3,000 payments, so be careful about the signs.

Question 4: In the prior question (question #3), what would the NPV be if the payments continued for 5 years instead of 4?

Question 5: Suppose that you save $1,000 for retirement and put it in the stock market. If the stocks rise at 7% per year, how much will your investment be worth in 40 years?

Question 6: Suppose that you have the same $1,000 to invest as in the prior question. If I know a better investment that will grow 8% instead of 7%, what would the future value be in 40 years?

Reference no: EM133396124

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