1. Calculate the future value of $2000 in
a) 5 years at an interest rate of 5% per year.
b) 10 years at an interest rate of 5% per year.
c) 5 years at an interest rate of 10% per year.
d) Why is the amount of interest earned in pat (a) less than half the amount of interest earned in part (b)?

2. You are thinking of retiring. Your retirement plan will pay you either $250,000 immediately on retirement or $350,000 five years after the date of your retirement. Which alternative should you choose if the interest rate is
a) 0% per year?
b) 8% per year?
c) 20% per year?

a) 5 years at an interest rate of 5% per year.
Present Value=PV=$2000
Number of periods=n=5
Interest Rate=r=5%
Future Value=FV=PV*(1+r)^n=2000*(1+5%)^5=$2552.56

b) 10 years at an interest rate of 5% per year.
Present Value=PV=$2000
Number of periods=n=10
Interest Rate=r=5%
Future Value=FV=PV*(1+r)^n=2000*(1+5%)^10=$3257.79

c) 5 years at an interest rate of 10% per year.
Present Value=PV=$2000
Number of periods=n=5
Interest Rate=r=10%
Future ...

Solution Summary

There are two problems. Solutions to these problems depict the steps to calculate future and present value of a single cash flow.

... flow for the same combinations of rates and times: (Do not ... actual market value of the lathe at that time also will be ... line over 5 years to a final value of zero ...

...10. Applying Time Value. ... Using the Rule of 72, if the interest rate is 8 percent per year, how long will it take for your money to quadruple in value? ...

... trees will mature in 12 years, time XYZ plans to ...times 4.17724817 40,697 $ Let's check using Excel formule 170,000.00 ... what will the total future value of this. ...

... http://www.studyfinance.com/lessons/timevalue/lesson19.mv ...Time Value on Excel (Using the Function (fx) Wizard) note ... Present Value of an Annuity: How much could I ...

... $10,000 rather than -$20,000, because of thesalvage value of $10,000]. ... one which: A) Will last the longest time B) Is ... The amount of money that would have to be ...

... A daily coffee and muffin can add up to over $1,300 a year... Reaching your financial goals will depend on the savings method used and the time value of money. ...

... the "compound amount") after the specified time has gone ... as #8 above, but with different values for P ... is compounded semiannually, which means two times per year...