Problem 1. Present Values. Compute the present value of a $100 cash flow for the following combinations of discount rates and times:
a. r = 8 percent, t = 10 years.
b. r = 8 percent, t = 20 years.
c. r = 4 percent, t = 10 years.
d. r = 4 percent, t = 20 years.
Problem 2. Future Values. Compute the future value of a $100 cash flow for the same combinations of rates and times as in problem 1.
Problem 3. Calculating Interest Rate. Find the interest rate implied by the following combinations of present and future values:
Present Value Years Future Value
$400 11 $684
$183 4 $249
$300 7 $300