Module 2 – CasePRESENT VALUE AND BOND VALUATIONAssignment Overview
This assignment is in a different direction than your Module 1 Case in that it is mostly computational in nature. Before starting this assignment, work through some of the examples in the background readings to make sure you understand all of the steps involved in future value and present value, including use of present value formulas to compute the value of a bond.
Please download the Case 2 Template. You will type your answers into this document. Save the document with your last name and submit to the dropbox. Note that you will get partial credit if you show your work even if the answers are incorrect.
1. Compute the future value for the following:
a. $2,000 after being invested for two years in a savings account with 3% interest rate
b. $5,000 after being invested for ten years in a savings account with a 1% interest rate
c. $3,500 after being invested for nine years in a savings account with an 11% interest rate
2. Compute the present value for the following:
a. $3,000 to be paid in one year with a 9% discount rate
b. $3,000 to be paid in three years with a 9% discount rate
c. $4,000 to be paid in ten years with a 5% discount rate