Future Value Problems

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2.

Find the FV of $10,000 invested now after five years if the annual interest rate is 8 percent.

  • a. What would be the FV if the interest rate is a simple interest rate?
  • b. What would be the FV if the interest rate is a compound interest rate?

3.

Determine the future values (FVs) 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

4.

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 (FV) 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 FV in terms of purchasing power?
  • c. What would be the investment’s FV in terms of purchasing power if inflation occurs at a 9 percent annual rate?

5.

Find the present value (PV) of $7,000 to be received one year from now assuming a 3 percent annual discount interest rate. Also

7. Determine the present value (PV) 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? calculate the PV if the $7,000 is received after

16.

Use a financial calculator or computer software program to answer the following questions:

  • a. What would be the future value (FV) of $15,555 invested now if it earns interest at 14.5 percent for seven years?
  • b. What would be the FV of $19,378 invested now if the money remains deposited for eight years and the annual interest rate is 18 percent?

17.

Use a financial calculator or computer software program to answer the following questions:

  • a. What is the present value (PV) of $359,000 that is to be received at the end of twenty-three years if the discount rate is 11 percent?
  • b. How would your answer change in (a) if the $359,000 is to be received at the end of twenty years?

two years.

19.

Use a financial calculator or computer software program to answer the following questions.

  • a. What would be the future value (FV) 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 semiannually?
  • b. How would your answer for (a) change if quarterly compounding were used?

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