How much will $ 20,000 invested today at 3 percent interest be worth in five years if it is compounded annually? Monthly? See earlier NOTE regarding requirements for Exercises.
A. Solve using a spreadsheet program such as Excel. Indicate the spreadsheet formula showing numeric values rather than cell references. For example, for the value that $ 100 today could grow to in two years, assuming 10 percent annual compounding, the spreadsheet solution formula would be: FV(10%, 2, 0, 100). Note that since there is no annuity payment (PMT) in this problem, it is necessary to show the blank between two commas or a zero after the number of periods. In addition, answer the questions using formulas with cell references.
B. Solve using a financial calculator. This is optional.