# Future Value Problems

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? 