cred itor accept in payment immed iately if she could earn 12 percent on herour If you owe $40,000 payable at the end of seven years, what amount should mone Solution Appendix b PⅤ=FⅤxPVF(12%,7 periods) PV=$40.000X452=$18,080 9-17 Jack Hammer invests in a stock that will pay dividends of $2.00 at the end of the first year; $2. 20 at the end of the second year; and $2.40 at the end of the third year. Also, he believes that at the end of the third year he will be able to ll the stock for $33. What is the present value of all future benefits if a discount rate of 1 l percent is applied?(Round all values to two places to the right of the decimal point. Solution: ppendix B PⅤ=FⅤI Discount rate =11% $200x.901=$1.80 2.20x.802 79 2.40x.731=175 33.00x.731=24.12 $2946 -313 CopyrightC2005 by The McGraw-Hill Companies, IncCopyright © 2005 by The McGraw-Hill Companies, Inc. S-313 9-16. If you owe $40,000 payable at the end of seven years, what amount should your creditor accept in payment immediately if she could earn 12 percent on her money? Solution: Appendix B PV = FV x PVIF (12%, 7 periods) PV = $40,000 x .452 = $18,080 9-17. Jack Hammer invests in a stock that will pay dividends of $2.00 at the end of the first year; $2.20 at the end of the second year; and $2.40 at the end of the third year. Also, he believes that at the end of the third year he will be able to sell the stock for $33. What is the present value of all future benefits if a discount rate of 11 percent is applied? (Round all values to two places to the right of the decimal point.) Solution: Appendix B PV = FVIF Discount rate = 11% $ 2.00 x .901 = $ 1.80 2.20 x .802 = 1.79 2.40 x .731 = 1.75 33.00 x .731 = 24.12 $29.46