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lizsublime
Jan 23, 2008, 08:12 PM
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.

Future Values. Compute the future value of a $100 cash flow for the same combinations of
rates and times as in problem 1.

gottabme
Aug 25, 2008, 12:22 PM
I believe this is what you are looking for.

The formula for Present Value is : PV = $100/ (1 + r) ^t

$100 is your cash flow r is the rate raised to the power of "t", years or time

$100 / (1 + .08)^10 = $100 / 2.16 = 46.30
$100 / (1 + .08)^20 = $100 / 4.66 = 21.46
$100 / (1 + .04)^10 = $100 / 1.48 = 67.57
$100 / (1 + .04)^20 = $100 / 2.19 = 45.66



The formula for Future Value is: FV = $100 x (1 + r) ^t

$100 x (1 + .08)^10 = $100 x 2.16 = 216.00
$100 x (1 + .08)^20 = $100 x 4.66 = 466.00
$100 x (1 + .04)^10 = $100 x 1.48 = 148.00
$100 x (1 + .04)^20 = $100 x 2.19 = 219.00