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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

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Answer:

Future Value = $740183.51

Present Value = $562054.74

[tex]F=PV(1+I)^n[/tex]

PV = 420000

I = 6

n = 5

[tex]F=420000(1+\frac{12}{100})^5[/tex][tex]F=740183.51[/tex]

The future value is $740183.51

[tex]A=P(1+\frac{r}{100})^n[/tex]

P = 420000

r = 6

n = 5

[tex]A=420000(1+\frac{6}{100})^5[/tex][tex]A=562054.74[/tex]

The present value would be $562054.74