nt value concept Answer each of the following questions hat

nt value concept Answer each of the following questions. hat sin e investment made today, ear ng 14% annual r e est will be thS5 800 at the end of 3 years? hat is the present value of S5800 to be received at the end of 3 years if the discount rate is 14%? hat is the most you would pay today for a promise to repay you S5.800 at the end of 3 years r your opportunity cost is 14%? mpare, contrast, and discuss your findings in part a through c single investment made today, ear ng 14% annual interest, worth S580 at the end of 3 years is s (Round to the nearest cent he present value of S5200 to be received at the end of 3 years. if the discount rate is 14%, ss (Round to the nearest cent) he most you would pay today for a promise to repay you $5800 at the end of 3 years if your opportunity cost is 14% is S . (Round to the nearest cent) ompare, contrast, and discuss your findings in part a through c. (Select all answers that apply) A. In all three cases, the answer is $3,914 83. In part a, it is the payment, PlMT In part b, it is the present value, PV In part c, it is the future value. EV 3. The annual interest rate is also called the discount rate or the opportunity cost ?. In a three cases, you are solving for the present value, PV, which is $3.914.83 o In parts a and c. $5 800 1s the future value. FV. In part b, $5,800 is the present value. PV. Theretore, parts a and c have the same answer. while part b

Solution

a)

Future value = present value ( 1 + R)ⁿ

5,800 = Present value ( 1 + 0.14)³

5,800 = Present value * 1.481544

3,914.83 = Present value

b)

Future value = present value ( 1 + R)ⁿ

5,800 = Present value ( 1 + 0.14)³

5,800 = Present value * 1.481544

3,914.83 = Present value

c)

Future value = present value ( 1 + R)ⁿ

5,800 = Present value ( 1 + 0.14)³

5,800 = Present value * 1.481544

3,914.83 = Present value

d)

b. The annual interest rate is also called the discount rate or oppurtunity cost

c. In all three cases, you are solving for the present value, PV, which is $3,914.83