# If we receive \$ 5,000, eight years from now, how

If we receive \$ 5,000, eight years from now, how much is that equivalent to today, if we believe that we can earn 5 percent on other opportunities? 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.

Annuity
An annuity is a series of equal payment made at equal intervals during a period of time. In other words annuity is a contract between insurer and insurance company in which insurer make a lump-sum payment or a series of payment and, in return,...