30.03.2023 - 18:34

Find the following values, using the equations, and then work the problems using a financial calculator to check your answers. Disregard rounding differences. (Hint: If you are using a financial calcu

Question:

Find the following values, using the equations, and then work the problems using a financial calculator to check your answers.

Disregard rounding differences. (Hint: If you are using a financial calculator, you can enter the known values and then press the appropriate key to find the unknown variable. Then, without clearing the TVM register, you can ?override? the variable that changes by simply entering a new value for it and then pressing the key for the unknown variable to obtain the second answer.

This procedure can be used in parts b and d, and in many other situations, to see how changes in input variables affect the output variable.)

a. An initial $500 compounded for 1 year at 6%.

b. An initial $500 compounded for 2 years at 6%.

c. The present value of $500 due in 1 year at a discount rate of 6%.

d. The present value of $500 due in 2 years at a discount rate of 6%.

Answers (1)
  • ENG
    April 4, 2023 в 12:51

    The questions are asking to find the values using equations and then check the answers using a financial calculator. Here are the solutions to each part:

    a. An initial $500 compounded for 1 year at 6%.

    Using the formula for compound interest:

    A = P(1 + r/n)^(nt)

    where A = the final amount P = the principal amount r = the annual interest rate (as a decimal) n = the number of \times the interest is compounded per year t = the time in years

    We have: P = $500 r = 6% = 0.06 n = 1 (since interest is compounded once a year) t = 1

    Plugging in the values, we get:

    A = 500(1 + 0.06/1)^(1*1) = $530.00

    Using a financial calculator: Enter 500 as PV (present value), 6 as I/Y (interest rate per year), 1 as N (number of years), and then solve for FV (future value). The answer should be $530.00, which matches the previous answer.

    b. An initial $500 compounded for 2 years at 6%.

    Using the same formula as before:

    A = P(1 + r/n)^(nt)

    We have: P = $500 r = 6% = 0.06 n = 1 t = 2

    Plugging in the values, we get:

    A = 500(1 + 0.06/1)^(1*2) = $561.80

    Using a financial calculator: Enter 500 as PV, 6 as I/Y, 2 as N, and then solve for FV. The answer should be $561.80, which matches the previous answer.

    c. The present value of $500 due in 1 year at a discount rate of 6%.

    Using the formula for present value:

    PV = FV/(1 + r)^t

    where PV = present value FV = future value r = the discount rate t = the time in years

    We have: FV = $500 r = 6% = 0.06 t = 1

    Plugging in the values, we get:

    PV = 500/(1 + 0.06)^1 = $471.70

    Using a financial calculator: Enter 500 as FV, 6 as I/Y, 1 as N, and then solve for PV. The answer should be $471.70, which matches the previous answer.

    d. The present value of $500 due in 2 years at a discount rate of 6%.

    We have: FV = $500 r = 6% = 0.06 t = 2

    Plugging in the values, we get:

    PV = 500/(1 + 0.06)^2 = $445.54

    Using a financial calculator: Enter 500 as FV, 6 as I/Y, 2 as N, and then solve for PV. The answer should be $445.54, which matches the previous answer.

    In conclusion, we can use financial formulas to find the values and then check our answers using a financial calculator.

Do you know the answer?
Not sure about the answer?
Find the right answer to the question Find the following values, using the equations, and then work the problems using a financial calculator to check your answers. Disregard rounding differences. (Hint: If you are using a financial calcu by subject Finance, and if there is no answer or no one has given the right answer, then use the search and try to find the answer among similar questions.
Search for other answers
New questions in the category: Finance
Authorization
*
*

Password generation