Solve the following problems:
i. Use equations or the tabular approach to find the following values. You may check your answers using a financial calculator. Disregard rounding differences.
An initial $500 compounded for 1 year at 6%
An initial $500 compounded for 2 years at 6%
The present value of $500 due in 1 year at a discount rate of 6%
The present value of $500 due in 2 years at a discount rate of 6%
ii. Use equations or the tabular approach (and a financial calculator to check your answers) to find the following values.
An initial $500 compounded for 10 years at 6%
An initial $500 compounded for 10 years at 12%
The present value of $500 due in 10 years at a discount rate of 6%
The present value of $500 due in 10 years at a discount rate of 12%
iii. Find the future value of the following annuities. The first payment in these annuities is made at the end of Year 1.
$400 per year for 10 years at 10%
$200 per year for 5 years at 5%
$400 per year for 5 years at 0%
Now rework parts a, b, and c assuming that payments are made at the beginning of the year.