this investment require table factors for periods beyond the table. create the new table factor AND the present value for $100,000 (compound amount) for 50 years at a nominal rate of 5 percent with interest compounded annually thanks
How do you expect us to know what table you are working from.
With today's excellent scientific calculators, the use of "tables" that were found in the back of most textbooks in the past is no longer common practise.
Your question is simply
PV = 100000(1.05)^-50
= 100000(.087203726)
= $8,720.37
Your new "table factor" would be the .08720372 found in the brackets
I am sure that your table would not contain as many decimals, as a few keystrokes on your calculator will produce for you
To calculate the present value of $100,000 for 50 years at a nominal rate of 5 percent with interest compounded annually, we need to find the table factor for 50 years at a 5 percent interest rate. However, the standard tables generally don't provide factors for periods beyond their given range.
So, we can use the formula to calculate the table factor:
Table factor = (1 + i)^n
Where:
- "i" is the interest rate per compounding period, in decimal form
- "n" is the number of compounding periods
In this case, the interest rate is 5 percent or 0.05 (in decimal form), and the number of compounding periods is 50 (as stated in the question).
Now, let's calculate the table factor:
Table factor = (1 + 0.05)^50
= 11.46741 (rounded to 5 decimal places)
So, the table factor for 50 years at a 5 percent interest rate is approximately 11.46741.
To find the present value, we divide the compound amount by the table factor:
Present value = Compound amount / Table factor
= $100,000 / 11.46741
≈ $8,718.34 (rounded to two decimal places)
Therefore, the present value of $100,000 (compound amount) for 50 years at a nominal rate of 5 percent with interest compounded annually is approximately $8,718.34.