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Future & Present Values
\$ 20.00

1. Find the FV of \$10,000 invested now after five years if the annual interest rate is 8 percent.

a. What would be the FV if the interest rate is a simple interest rate?

b. What would be the FV if the interest rate is a compound interest rate?

2. Determine the future value (FVs) if \$5000 is invested in each of the following situations:

a. 5 percent for ten years

b. 7 percent for seven years

c. 9 percent for four years

3. You are planning to invest \$2500 today for three years at a nominal interest rate of 9 percent with annual compounding.

a. What would be the future value(FV)of your investment?

b. Now assume that inflation is expected to be 3 percent per year over the same three-year period. What would be the investment's FV in terms of purchasing power?

c. What would be the investment's FV in terms of purchasing power if inflation occurs at a 9 percent annual rate?

4. Find the present value(PV)of \$7000 to be received one year from now assuming a 3 percent annnual discount interest rate. Also calculate the PV if the \$7,000 is received after 2 years.

5. Use Financial calculate or computer software program to answer the following questions:

a. What would be the future value(FV) of \$15,555 invested now if it earns interest at 14.5 percent for seven years?

b. What would be the FVs of \$19,378 invested now if the money remains deposited for eight years and the annual interest rate is 18 percent?

6. Use a Financial calculate or computer software program to answer the following questions:

a. What is the present value(PV) of \$359,000 that is to be received at the end of twenty-three years if the discount rate is 11 percent?

b. How would your answer change in (a) if the \$359,000 is to be received at the end of twenty years?

7. Use a Financial calculate or computer software program to anwer the following questions.

a. What would be the future value(FV) of \$19,378  invested now if the money remains deposited for eight years, the annual interest rate is 18 percent, and interest on the investment is compounded semiannually?

b. How would your answer for (a) change if quarterly compounding were used?

8. Determine the present value (PV) if \$15000 is to be received at the end of eight years and the discount rate is 9 percent. How would your anwer change if you had to wait six years to receive the \$15,000?

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