Present and Future Value Computations
Required:
1. Compute the present value for each of the following situations, assuming an interest
rate of 10% compounded annually. (Round amounts to the nearest dollar.)
a. A single payment of $30,000 due on a mortgage five years from now.
b. A series of payments of $5,000 each, due at the end of each year for five years.
c. A five-year, 10% loan of $25,000, with interest payable annually, and the principal
due in five years.
2. Compute the future value amounts (rounded to the nearest dollar) in each of the following
situations:
a. A $20,000 lump-sum investment today that will earn interest at 10% compounded
annually over five years.
b. A $5,000 lump-sum investment today that will earn interest at 8%, compounded
quarterly to provide money for a child’s college education 15 years from now.