You deposit $10,000 in a bank account that pays 10% interest annually, how much will be in your account after 5 years?
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Future Value of a Single Payment
If you deposit $10,000 in a bank account that pays 10% interest annually, how muchwill be in your account after 5 years? (4-2) Present Value of aSingle PaymentWhat is the present value of a security that will pay $5,000 in 20 years if securities ofequal risk pay 7% annually?(4–6)Future Value: OrdinaryAnnuity versus AnnuityDueWhat is the future value of a 7%, 5-year ordinary annuity that pays $300 each year?If this were an annuity due, what would its future value be?(4–9)Present and FutureValues of Single CashFlows for DifferentPeriodsFind the following values, using the equations, and then work the problems using afinancial calculator to check your answers. Disregard rounding differences. (Hint:If you are using a financial calculator, you can enter the known values and thenpress the appropriate key to find the unknown variable. Then, without clearingthe TVM register, you can “override†the variable that changes by simply enteringa new value for it and then pressing the key for the unknown variable to obtainthe second answer. This procedure can be used in parts b and d, and inmany other situations, to see how changes in input variables affect the outputvariable.)a. An initial $500 compounded for 1 year at 6%b. An initial $500 compounded for 2 years at 6%c. The present value of $500 due in 1 year at a discount rate of 6%d. The present value of $500 due in 2 years at a discount rate of 6%(4–12)Future Value of anAnnuityFind the future value of the following annuities. The first payment in these annuitiesis made at the end of Year 1, so they are ordinary annuities. (Notes: See the Hint toProblem 4-9. Also, note that you can leave values in the TVM register, switch to BeginMode, press FV, and find the FV of the annuity due.)a. $400 per year for 10 years at 10%b. $200 per year for 5 years at 5%c. $400 per year for 5 years at 0%d. Now rework parts a, b, and c assuming that payments are made at the beginningof each year; that is, they are annuities due.166 Part 2: Fixed Income Securities9781133665007, Financial Management: Theory and Practice, Michael C. Ehrhardt – © Cengage Learning.rigphtis re snerveedi. dyisttrib untioon aulloswesd wuithto upt exupredss(4–13)Present Value of anAnnuityFind the present value of the following ordinary annuities (see the Notes to Problem 4-12).a. $400 per year for 10 years at 10%b. $200 per year for 5 years at 5%c. $400 per year for 5 years at 0%d. Now rework parts
