Problem 1: Present value calculations. Using a present value table, your calculator, or a computer program present value function, answer the following questions: Show formulas.
a. What is the present value of nine annual cash payments of $ 4,000, to be paid at the end of each year using an interest rate of 6%?
b. What is the present value of $15,000 to be paid at the end of 20 years, using an interest rate of 18%?
c. How much cash must be deposited in a saving account as a single amount in order to accumulate $300,000 at end of 12 years, assuming that the account will earn 10%?
d. How much cash must deposited in a saving account (as a sing amount) in order to accumulate $50,000 at the end of seven years, assuming that the account will earn 12% interest?
Modeling with Linear and Exponential Functions:
Consider the formula P = 67.38. (1.026) t. If we let P represent the population of Mexico in year t where t is the number of years from 1980; confirm that this formula gives the same population values as those given in the table in example 6.5
The following table gives the estimated population to (in millions) of Mexico for the years 1980 to 1986.
Year Population in Millions
1980 67.38
1981 69.13
1982 70.93
1983 72.77
1984 74.66
1985 76.60
1986 78.59