Future Value / Present Value, Interest and Annuity Tables

1. If you borrow $15,618 and are required to pay the loan back in 7 equal annual installments of $300. What is the interest rate assocated with this loan?

2. Your rich uncle has offered you a choice of one of the three following alternatives. Which one would you take?
a) $10,000 now
b) $2000 a year for 8 years -equal investments have earned 11%
c) $24, 000 at the end of 8 years - equal investments have earned 11%.

3. Joe will receive $175,000 in 50 years. What is his pot of gold worth today if the alternative investment rate is 14%.

I would like Jiong Tu, Phd assistance and possible on-line tutor if possible. I was having a very difficult time reading the table and with your assistance I was able to take my test at school and feel that I can understand the problems. Again thank your for help me.

Solution Preview

1.)
Amount of installments y = $3000
NOTE: it should be $3000, not $300.

Let us assume the rate of interest be 'r', and the principal for the installments be x1, x2, x3,....,x7 for 7 installments respectively.

Therefore, for 1st installment,
y = x1*(1 + r/100)^1
=> x1 = y/(1+r/100) = y*K

where K = 1/(1+r/100)

For 2nd installment,
y = x2*(1+r/100)^2
=> x2 = y/(1+r/100)^2 = y*K^2

And so on up to the 7th installment.

Therefore, total principal,
P = 15618 = x1 + x2 + x3 + ..........+ x7
=> 15618 = ...

Solution Summary

Future Value / Present Value, Interest and Annuity Tables are investigated.

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Please see the attached Tables

Jean will receive $8,500 per year for the next 15 years from her trust. If a 7% interest rate is applied, what is the current value of the future payments? Describe how you solved this problem, including which table (for example, presentvalueandfuturevalue) was used and why?

There are three factors that affect the presentvalue of an annuity. 1) discount rate, 2) the number of discount periods, and 3) the amount of the periodic receipts or payments. I understand #1, but am having a problem with 2 and 3.

Jean will receive $8,500 per year for the next 15 years from her trust. If a 7% interest rate is applied, what is the current value of the future payments? Describe how you solved this problem, including which table (for example, presentvalueandfuturevalue) was used and why.

you have applied for a job at a local bank. as part of its evaluation process, you must take an examination on time value of money analysis covering the following...
b. 1) whats the futurevalue of $100 after 3 years if it earns 10% annual compounding?
2) whats the presentvalue of $100 to be received in 3 years if the

Ali Shah sets aside 2,000 each year for 5 years. He then withdraws the funds on an equal annual basis for the next 4 years. If Ali wishes to determine the amount of the annuity to be withdrawn each year, he should use following two tables in this order:
a) presentvalue of an annuity of $1; futurevalue of an annuity of $1

Futurevalue calculation Without referring to tables or to the preprogrammed function on your financial calculator, use the basic formula for futurevalue along with the given interest rate, i, and the number of periods, n, to calculate the futurevalueinterest factor in each of the cases shown in the following table.
Compare

1. How is the futurevalue (Appendix A) related to the presentvalue of a single sum (Appendix B)?
2. 2. How is the presentvalue of a single sum (Appendix A) related to the presentvalue of an annuity (Appendix D)?