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Question(s) / Instruction(s):

An investor has asked for your help with the following time value of money applications. Use the appropriate factors from Table 6-4 or Table 6-5 to answer the following questions.

Required:

(a)          What is the present value of $50,000 to be received in 4 years using a discount rate of 18%?

(b)          How much should be invested today at a return on investment of 18% compounded annually to have $50,000 in 4 years?

(c)           If the return on investment was greater than 18% compounded annually, would the amount to be invested today to have $50,000 in 4 years be more or less than the answer to part (b)?

 

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