# Present and future values for different interest rates find the following values. compounding/discounting occurs annually. round your

Present and future values for different interest rates find the following values. compounding/discounting occurs annually. round your answers to the nearest cent. an initial $700 compounded for 10 years at 8%.$ an initial $700 compounded for 10 years at 16%.$ the present value of $700 due in 10 year at a discount rate of 8%.$ the present value of $2,800 due in 10 years at 16%.$ the present value of $2,800 due in 10 years at 8%.$ define present value. the present value is the value today of a sum of money to be received in the future and in general is less than the future value. the present value is the value today of a sum of money to be received in the future and in general is greater than the future value. the present value is the value today of a sum of money to be received in the future and in general is equal to the future value. the present value is the value in the future of a sum of money to be received today and in general is less than the future value. the present value is the value in the future of a sum of money to be received today and in general is greater than the future value. -select-vvitem 6 how are present values affected by interest rates? -select-assuming positive interest rates, the present value will increase as the interest rate increases. assuming positive interest rates, the present value will decrease as the interest rate increases. assuming positive interest rates, the present value will decrease as the interest rate decreases. assuming positive interest rates, the present value will not change as the interest rate increases. assuming positive interest rates, the present value will not change as the interest rate decreases.

Instructions are listed below.

Explanation:

Giving the following information:

Final value formula:

FV= PV*(1+i)^n

Present value formula:

PV= FV/(1+i)^n

A) An initial $700 compounded for 10 years at 8%. FV= 700*(1+0.08)^10=$1,511.25

B) An initial $700 compounded for 10 years at 16%. FV= 700*(1.16)^10=$3,088

C) The present value of $700 due in 10 year at a discount rate of 8%. PV= 700/(1.08)^10=$324.24

D) The present value of $2,800 due in 10 years at 16%. PV= 2,800/1.16^10=$634.71

E) The present value of $2,800 due in 10 years at 8%. PV= 2,800*(1.08)^10=$1,296.94

F) To define the present value we need to know one important principle.

1 dollar today is better than 1 dollar tomorrow.

This is because of the opportunity cost of money. If I get one dollar today, I can invest it and gain by the passing of time more than if I invest it tomorrow. Therefore, the present value is:

The present value is the value today of a sum of money to be received in the future and in general, is less than the future value.

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