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Question(s) / Instruction(s):

An investor has asked for your help with the following time value of money applications.

Required:

(a)          What is the present value of $51,000 to be received in 6 years using a discount rate of 10%?

(b)          How much should be invested today at a return on investment of 10% compounded annually to have $51,000 in 6 years?

(c)           If the return on investment was greater than 10% compounded annually, would the amount to be invested today to have $51,000 in 6 years be more or less than the answer to part (b)?

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