Question

A company recently expanded their assembly operations at a cost of $420000 management expects that the investment will grow at a rate of 12% per year compounded annually for the next 5 years find the future value of the investment then find the present value of the amount at a rate of 6% per year compound annually

Answer 1

Answer:

Future Value = $740183.51

Present Value = $562054.74

$F=PV(1+I)^n$

PV = 420000

I = 6

n = 5

$F=420000(1+\frac{12}{100})^5$$F=740183.51$

The future value is $740183.51

$A=P(1+\frac{r}{100})^n$

P = 420000

r = 6

n = 5

$A=420000(1+\frac{6}{100})^5$$A=562054.74$

The present value would be $562054.74