Compound interest , present value, future values
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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 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
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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 ...
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