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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 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

$2.19
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