Present Value and Future Value The following situations involve time value of money calculations:

1. A deposit of $7,000 is made on January 1, 2010. The deposit will earn interest at a rate of 8%. How much will be accumulated on January 1, 2015, assuming that interest is compounded

(a) annually,

(b) semiannually, and

(c) quarterly?

2. A deposit is made on January 1, 2010, to earn interest at an annual rate of 8%.

The deposit will accumulate to $15,000 by January 1, 2015. How much money was originally deposited assuming that interest is compounded

(a) annually, (b)

semiannually, and

(c) quarterly?

AppendixLO1