1. Compute the present value of a $130 cash flow for the following combinations of discount rates and times:(Do not round intermediate calculations. Round your answers to 2 decimal places.) |
Present Value | |
a. r = 8%, t = 10 years | |
b. r = 8%, t = 20 years | |
c. r = 4%, t = 10 years | |
d. r = 4%, t = 20 years |
2. Compute the future value of a $220 cash flow for the same combinations of rates and times: (Do not round intermediate calculations. Round your answers to 2 decimal places.) |
Future Value | |
a. r = 8%, t = 10 years | |
b. r = 8%, t = 20 years | |
c. r = 4%, t = 10 years | |
d. r = 4%, t = 20 years |
3. In 1880 five aboriginal trackers were each promised the equivalent of 100 Australian dollars for helping to capture the notorious outlaw Ned Kelley. In 1999 the granddaughters of two of the trackers claimed that this reward had not been paid. The prime minister stated that if this was true, the government would be happy to pay the $100. However, the granddaughters also claimed that they were entitled to compound interest. |