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.
Calculate the FV (Future Value) using the “Future Value or Compound Amount of $1.00” table in your textbook.
Calculate the FV (Future Value) using the formula: FV = P(1 + R)^{N}
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.
How much interest is earned on this investment?
How much money will you have to invest in the startup after the 28 days?
How much money must be invested into an account paying 6% annually, compounded annually, to have $500,000 in 25 years when I retire?
Calculate the PV (Present Value) using the “Present Value of $1.00” table in your textbook.
Calculate the PV (Present Value) using the formula: PV = FV / (1 +R)^{N}
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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