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Future Value

1. Find the future value of the following investments, the interest rate is 8 percent per year:
a. $100 is invested each year beginning one year from now and continuing through year 10, when the proceeds are withdrawn.
b. $100 is invested each year starting today and continuing through year 10, when the proceeds are withdrawn.
c. $100 is invested each year beginning one year from now and continuing through year 9. The proceeds are to be withdrawn in year 10
2. Calculate the following:
a. If you put $1000 into a saving certificate today paying interest of 10 percent per year, how much money will you have in the account after six years if no withdrawals are made from it until then? How much of this is interest?
b. Suppose you withdraw the interest every year. What will be your total earnings? Why does this differ from the interest earned in (a)?

Solution Preview

Please see the attached file.

Note: For all the questions, I recommend that you either use a financial calculator or Excel. Calculating Present Values and Future Values requires a lot of complex calculations. I recommend that if you do not have a financial calculator, you buy one. It will be one of your best investments :)

Note: For all the questions, I recommend that you either use a financial calculator or Excel. Calculating Present Values and Future Values requires a lot of complex calculations. I recommend that if you do not have a financial calculator, you buy one. It will be one of your best investments 

1. Find the future value of the following investments, the interest rate is 8 percent per year:
a. $100 is invested each year beginning one year from now and continuing through year 10, when the ...

Solution Summary

The solution provides answers to the numerous time value problems in the question.

$2.19