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  • Jan 23, 2008, 08:12 PM
    lizsublime
    Present/Future Values
    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.
  • Aug 25, 2008, 12:22 PM
    gottabme
    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

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