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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?

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

Present & Future Interest Rates - Future value calculation Without referring to tables or to the preprogrammed function on your financial calculator ...

Future value calculation Without referring to tables or to the preprogrammed function on your financial calculator, use the basic formula for future value along with the given interest rate, i, and the number of periods, n, to calculate the future value interest factor in each of the cases shown in the following table.
Compare the calculated value to the value in Appendix Table A-1.

LG2
Case Interest rate, i Number of periods, n
A 12% 2
B 6% 3
C 9% 2
D 3% 4

Present value calculation Without referring to tables or to the preprogrammed function on your financial calculator, use the basic formula for present value, along with the given opportunity cost, i, and the number of periods, n, to calculate the present value interest factor in each of the cases shown in the accompanying table. Compare the calculated value to the table value.

LG2

Case cost Opportunity Cost, i Number of periods, n
A 2% 4
B 10% 2
C 5% 3
D 13% 2

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