The present value and future value for the missing gaps in the table are; As gotten below
The given table is as follows;
Present Value Value in One Year Value in Two Years
Date Received (Dollars) (Dollars) (Dollars)
Today 1,000.00 ? ?
In 1 year ? 1,000.00 ?
In 2 years ? 1,000.00 ?
Let us find the value in one year today from;
FV1 = PV + PV(i)
FV1 = PV(1 + i)
FV1 = 1000(1 + 0.05)
FV1 = $1050
Let us find the value in two years today from;
FV2 = FV1 + FV(i)
FV2 = PV(1 + i)
FV2 = 1050(1 + 0.05)
FV2 = $1102.5
Let us find the present value in 1 year;
PV1 = FV_n(1/(1 + i)ⁿ)
PV1 = 1000(1/(1 + 0.05)¹)
PV1 = $950
Let us find the present value in 2 years;
PV2 = FV_n(1/(1 + i)ⁿ)
PV2 = 1000(1/(1 + 0.05)²)
PV1 = $907.3
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