Present Value of Amounts Due

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Question: Present Value of Amounts Due Assume that you are going to receive $440,000 in 10 years. The curr…
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Question: Present Value of Amounts Due  Assume that you are going to receive $440,000 in 10 years. The curr...

Show transcribed image text Present Value of Amounts Due Assume that you are going to receive $440,000 in 10 years. The current market rate of interest is 11%, compounded annually. a. Using the present value of $1 table in Exhibit 5, determine the present value of this amount compounded annually. Round to the nearest whole dollar. $____ b. Why is the present value less than the $440,000 to be received in the future? The present value is less due to the compounding of interest over the 10 years.

Present Value of Amounts Due Assume that you are going to receive $440,000 in 10 years. The current market rate of interest is 11%, compounded annually. a. Using the present value of $1 table in Exhibit 5, determine the present value of this amount compounded annually. Round to the nearest whole dollar. $____ b. Why is the present value less than the $440,000 to be received in the future? The present value is less due to the compounding of interest over the 10 years.

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