Complete the following:
1: Find the future value one year from now of a $7,000 investment at a 3 percent annual compound interest rate. Also, calculate the future value if the investment is made for two years.
2: Find the future value of $10,000 invested now after five years if the annual interest rate is 8 percent.
A. What would be the future value if the interest rate is a simple interest rate?
B. What would be the future value if the interest rate is a compound interest rate?
3: Determine the future values if $5,000 is invested in each of the following situations:
5 percent for ten years
7 percent for seven years
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.
What would be the future value of your investment?
Now assume that inflation is expected to be 3 percent per year over the same three-year period. What would be the investment's future value in terms of purchasing power?
What would be the investment's future value in terms of purchasing power if inflation occurs at a 9 percent annual rate?
5: Find the present value of $7,000 to be received one year from now, assuming a 3 percent annual discount interest rate. Also calculate the present value if the $7,000 is received after two years.
P7: Determine the present value 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?
6: Use a financial calculator or computer software program to answer the following questions:
a. What would be the future value of $15,555 invested now if it earns interest at 14.5 percent for seven years?
b. What would be the future value of $19,378 invested now if the money remains deposited for eight years and the annual interest rate is 18 percent?
7: Use a financial calculator or computer software program to answer the following questions:
What is the present value of $359,000 that is to be received at the end of 23 years if the discount rate is 11 percent?
How would your answer change in (a) if the $359,000 is to be received at the end of 20 years?
8: Use a financial calculator or computer software program to answer the following questions:
What would be the future value of $7,455 invested annually for nine years beginning one year from now if the annual interest rate is 19 percent?
What would be the present value of a $9,532 annuity for which the first payment will be made beginning one year from now, payments will last for 27 years, and the annual interest rate is 13 percent?
9: Use a financial calculator or computer software program to answer the following questions.
What would be the future value 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 semi-annually?
How would your answer for (a) change if quarterly compounding were used?