• 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?
• Determine the future values 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
• 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.
• Determine the present values if $5000 is received in the future (i.e., at the end of each indicated time period) in each of the following situations:
a) 5 percent for ten years
b) 7 percent for seven years
c) 9 percent for four years
• 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.
• 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 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 future value in terms of purchasing power?
c) What would be the investment's future value in terms of purchasing power if inflation occurs at a 9 percent annual rate?