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Homework answers / question archive / Answer the questions with appropriate formulae in a paper neatly to upload in the moodle
Answer the questions with appropriate formulae in a paper neatly to upload in the moodle. 1.) Determine whether receiving BD 2,042 today is equivalent to receiving BD 3,000 after five (5) years, assuming that the interest rate per annum is 8%. What is the equivalent of this amount after year 3?
PRESENT VALUE = BD 2042
INTEREST RATE PER ANNUM = 8%
FUTURE VALUE = PV ( 1+r)^n
PV = PRESENT VALUE
r = interest rate
n = number of years
FUTURE VALUE = 2042(1+8%) ^5 = BD 3,000
YES, RECEIVING BD 2,042 TODAY IS EQUIVALENT TO RECEIVING BD 3000 AFTER 5 YEARS.
EQUIVALENR AMOUNT AFTER 3 YAERS WOULD BE
PRESENT VALUE = BD 2042
INTEREST RATE PER ANNUM = 8%
FUTURE VALUE = PV ( 1+r)^n
PV = PRESENT VALUE
r = interest rate
n = number of years
FUTURE VALUE = 2042(1+8%) ^3 = BD 2572
