Answer with Step-by-step explanation:
We are given that
a.P=$500
Time=1 year
r=6%
FV=[tex]P(1+\frac{r}{100})^n[/tex]
Where P=Present value
r=Annual rate of interest
n=Time(in year)
Using the formula
FV=[tex]500(1+\frac{6}{100})^1=[/tex]$530
Hence, compounding value=$530
2.P=$500
n=2 years
[tex]r=6[/tex]%
Substitute the values then we get
FV=[tex]500(1+\frac{6}{100})^2=[/tex]$561.8
Hence, compounding value=$561.8
3.Present value=$500
r=6%
n=1 year
Substitute the values
[tex]500=P(1+\frac{6}{100})=1.06P[/tex]
[tex]P=\frac{500}{1.06}[/tex]=$471.7
Hence, discounting value=$471.7
4.Present value=$500
r=6%
n=2 years
Substitute the values then we get
[tex]500=P(1+\frac{6}{100})^2=(1.06)^2P[/tex]
[tex]P=\frac{500}{(1.06)^2}=[/tex]$445
Hence, discounting value=$445
