Project #80680 - Future Value

 

 

 

 

 

 

Future Value and Present Value Assignment (Total 40 Points)

 

 

 

Question 1: (10 Points)

 

 

 

Calculate the future value of an investment of $1,000, after 6 months, earning 6% APR, compounded monthly, by compounding manually.

 

 

 

R= 6%/12=.06/12=.005

 

N= .5(12) = 6

 

FV=1,000(1+ .005) ^6

 

FV= 1,000(1.005) ^6

 

FV= 1035.53

 

 

 

 

 

 

 

 

 

Reminder: Be sure to show your work, and to calculate the period interest before solving.

 

 

 

Question 2: (10 Points)

 

 

 

Find the future value of a $150,000 Certificate of Deposit that pays compounded interest every six months at the rate of 4% per year. The CD has a term of 5 years.

 

  1. Calculate the FV (Future Value) using the “Future Value or Compound Amount of $1.00” table in your textbook.

 

 

 

  1. Calculate the FV (Future Value) using the formula: FV = P(1 + R)N

 

 

 

  1. How much interest was earned on the investment?

 

Question 3: (10 Points)

 

 

 

You inherit $200,000 and decide to invest it for 28 days compounded daily at 6% annual interest. After the 28 days, you are going to invest your new found money in a startup business.

 

  1. How much interest is earned on this investment?

 

 

 

  1. How much money will you have to invest in the startup after the 28 days?

 

 

 

Question 4: (10 Points)

 

 

 

How much money must be invested into an account paying 6% annually, compounded annually, to have $500,000 in 25 years when I retire?

 

 

 

  1. Calculate the PV (Present Value) using the “Present Value of $1.00” table in your textbook.

 

 

 

  1. Calculate the PV (Present Value) using the formula: PV = FV / (1 +R)N

 

 

 

  1. How much interest did you earn over the life of the investment?

 

Subject Mathematics
Due By (Pacific Time) 09/01/2015 10:00 pm
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