How do you calculate future and present value of an annuity with compounding interest?
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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?
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This solution shows the formulas and calculations for each scenario, formatted in an attached Word document.
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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 ...
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