Calculate the present value of the following situation. Showing your work

Oct 9th, 2015
Anonymous
Category:
Accounting
Price: $10 USD

Question description

1. Assume that today is January 1, 2014, and you have the opportunity to receive $1,000 cash on December 31, 2016. At an interest rate of 10 percent per year, how much is the $1,000 payment worth to you on January 1, 2014? Be sure to show your work.


2. Assume that on January 1, 2014, you deposit $2,000 in a savings account at 10 percent annual interest, compounded annually. At the end of three years, how much will the $2,000 increase to? Be sure to show your work.

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