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Present Value / Future Value

Show the formula used in the following questions in detail

1)
a. What is the future value of $4,000 invested at 6% for 22 years with annual compounding?

b. What is the future value of $4,000 invested at 6% for 22 years with monthly compounding?

c. What is the future value of $4,000 invested at 6% for 22 years with continuous compounding?

d. What is the present value of 1,000,000 pesos due in 14 years with a discount rate = 7% using annual compounding?

e. What is the present value of 1,000,000 peso due in 14 years with a discount rate = 7% using continuous compounding?

Solution Preview

1)

a. What is the future value of $4,000 invested at 6% for 22 years with annual compounding?

The future value can be found using the formula FV = PV X (1+r)^n.
Here FV is the future value
PV is the present value
r is the rate
n is the time period
FV = 4,000 X (1+6%)^22 = $14,414.15

b. What is the future value of $4,000 invested at 6% ...

Solution Summary

The solution explains the calculation of present value and future value

$2.19