# Compound interest , present value, future values

Please complete the following calculations showing all work.

*Compound Interest - what amount will the following investments accumulate?

1) $5,000 invested for 10 yrs at 10% compounded annually

2). $8,000 invested for 7 yrs at 8% compounded annually

3). $775 invested for 12 years at 12% compounded annually

4). $21,000 invested for 5 years at 5% compounded annually

*Present value - what is the present value of the following future amounts?

1). $800 to be received 10 yrs from now discounted back to the present at 10%

2). $300 to be received 5yrs from now discounted back to the prseent at 5%

3). $1,000 to be received 8 yrs from now discounted back to the present at 3%

4) $1,000 to be recieved 8 yrs from now discounted back to the present at 20%

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#### Solution Preview

Please see attached file for answers:

Note: the abbreviations have the following meanings

PVIF= Present Value Interest Factor

FVIF= Future Value Interest Factor

They can be read from tables or calculated using the following equations

PVIF( n, r%)= =1/(1+r%)^n

FVIF( n, r%)= =(1+r%)^n

*Compound Interest - what amount will the following investments accumulate?

1) $5,000 invested for 10 yrs at 10% compounded annually

n= 10 years

r= 10.00% per annum

FVIF (10 periods, 10.% rate ) = 2.593742

Present value= $5,000

Therefore, future ...

#### Solution Summary

The solution calculates

1) the amount at a future date, given interest rates and the number of years

2) present value of a future amount using the process of discounting