Future Value Problems
2.
Find the FV of $10,000 invested now after five years if the annual interest rate is 8 percent.
- a. What would be the FV if the interest rate is a simple interest rate?
- b. What would be the FV if the interest rate is a compound interest rate?
3.
Determine the future values (FVs) if $5,000 is invested in each of the following situations:
- a. 5 percent for ten years
- b. 7 percent for seven years
- c. 9 percent for four years
4.
You are planning to invest $2,500 today for three years at a nominal interest rate of 9 percent with annual compounding.
- a. What would be the future value (FV) of your investment?
- b. Now assume that inflation is expected to be 3 percent per year over the same three-year period. What would be the investment’s FV in terms of purchasing power?
- c. What would be the investment’s FV in terms of purchasing power if inflation occurs at a 9 percent annual rate?
5.
Find the present value (PV) of $7,000 to be received one year from now assuming a 3 percent annual discount interest rate. Also
7. Determine the present value (PV) if $15,000 is to be received at the end of eight years and the discount rate is 9 percent. How would your answer change if you had to wait six years to receive the $15,000? calculate the PV if the $7,000 is received after
16.
Use a financial calculator or computer software program to answer the following questions:
- a. What would be the future value (FV) of $15,555 invested now if it earns interest at 14.5 percent for seven years?
- b. What would be the FV of $19,378 invested now if the money remains deposited for eight years and the annual interest rate is 18 percent?
17.
Use a financial calculator or computer software program to answer the following questions:
- a. What is the present value (PV) of $359,000 that is to be received at the end of twenty-three years if the discount rate is 11 percent?
- b. How would your answer change in (a) if the $359,000 is to be received at the end of twenty years?
two years.
19.
Use a financial calculator or computer software program to answer the following questions.
- a. What would be the future value (FV) of $19,378 invested now if the money remains deposited for eight years, the annual interest rate is 18 percent, and interest on the investment is compounded semiannually?
- b. How would your answer for (a) change if quarterly compounding were used?
