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Calculating the Present and Future Value

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1. How much will you have at the end of 22 years if put $8680 per year at the end of each year into a saving account earning 1.6% annually?

2. How much do you need to invest today to have $89,000 at the end of 19 years if you can earn 6.5% annually?

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Solution Preview

1.
Annual deposit=R=$8680
Number of periods=n=22
Interest ...

Solution Summary

This response looks at two problems. Solution to first problem depicts the steps to calculate the FV of an ordinary annuity. Solution to second problem calculates the PV of given cash flow.

$2.19
Similar Posting

Corporate finance : Time value of money

13. The future value 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 future value of $100 received today and deposited at 6 percent for four years is
A. $126.
B. $ 79.
C. $124.
D. $116.

15-19. Calculate the present value of the annuity assuming that it is an ordinary annuity.

Case Amount of Annuity Interest Rate Period / Years
A $14,000 9% 3
B $17,500 13% 15
C $975 18% 7
D $1,127,000 4% 9
E $10,000 7% 3

20-24. For each of the cases shown below in the table, calculate the present value of the cash flow:

Case Single Cash Flow Interest Rate End of Periods / Years
A $13,000 10% 5
B $34,000 17% 25
C $16,000 6% 18
D $210,000 15% 15
E $90,000 20% 9

25-29 For each of the cases shown below in the table, calculate the future value of the cash flow:

Case Single Cash Flow Interest Rate End of Periods / Years
A $3,000 10% 7
B $44,000 12% 5
C $6,000 8% 10
D $27,000 16% 12
E $99,000 20% 6

Calculate the above future values in questions 25-29 as semi annual and quarterly compounding.

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