How do you calculate future and present value of an annuity with compounding interest?

Using the appropriate interest table, answer each of the following questions. (Each case is independent of the others.)

(a) What is the future value of $7,000 at the end of 5 periods at 8% compounded interest?
(b) What is the present value of $7,000 due 8 periods hence, discounted at 11%?
(c) What is the future value of 15 periodic payments of $7,000 each made at the end of each period and compounded at 10%?
(d) What is the present value of $7,000 to be received at the end of each of 20 periods, discounted at 5% compound interest?

Solution Preview

See attached file.

Computation of Future values
Using the appropriate interest table, answer
each of the following questions. (Each case is independent of the others.)
(a) What is the future value of $7,000 at the end of 5 periods at 8% compounded interest?

FV = PV (1+i)n where PV is the present value
FV is the future value
i is the interest rate
n is the period

FV = 7,000(1 ...

Solution Summary

This solution shows the formulas and calculations for each scenario, formatted in an attached Word document.

Problem 1
If interest rates are 8 percent, what is the futurevalue of a $400 annuity payment over six years? Unless otherwise directed, assume annual compounding periods.
- Recalculate the futurevalue at 6 percent interest and 9 percent interest.
Problem 2
If interest rates are 5 percent, what is the presentvalue of a

13. The futurevalue of $200 received today and deposited for three years in an account which pays semiannual interest of 8 percent is ______.
A. $253.00
B. $252.00
C. $158.00
D. $134.66
14. The futurevalue of $100 received today and deposited at 6 percent for four years is
A. $126.
B. $ 79.
C. $124.
D. $116.
15-

1) How much will you have in 5 years if you put $10,000 into an account that earns 6% annually?
2) What is the presentvalue of $100,000 you will receive in 10 years if you are using an 8% discount rate?
3) How much will you have in 10 years if you invest $1,000 a year starting today at an interest rate of 7%?
4) Wh

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

You make deposits of $2 each year for 30 years. The rate of interest that will prevail is 10 percent for the first 20 years and then 12 percent for the remaining period. If the interest rate is compounded continuously, what is the presentandfuturevalue of these deposits.

How would youcalculate the presentandfuturevalue of the following annuity streams?
a. $5,000 received each year for 5 years on the last day of each year if your investments pay 6 percent compounded annually.
b. $5,000 received each quarter for 5 years on the last day of each quarter if your investments pay 6 percent co

A manufacturing company wants to have $100,000 available in 5 years to replace a production line. The amount of money that would have to be deposited each year at an interest rate of 10% per year would be closest to?
a. 12,380
b. 13,380
c. 16,380
d. 26,380

Part A: What is the difference between "simple" and "compound" interest? What are some of the uses of compound interest in business? What are some of the effects of using compound interest when evaluating futurevalue transactions and calculations?
Part B: Describe the concepts of PV, FV, PV of an annuity, and FV of an annui