1. Fill in the future values for the following table,

a. Using the future value formula, FV = PV ? (1 + r ) ⁿ .

b. Using the time value of money keys or function from a calculator or spreadsheet.

2. Jose has $4,000 to invest for a two-year period. He is looking at four different investment choices. What will be the value of his investment at the end of two years for each of the following potential investments?

a. Bank CD at 4%.

b. Bond fund at 8%.

c. Mutual stock fund at 12%.

d. New venture stock at 24%.

3. Fill in the present values for the following table,

a. Using the present value formula, PV = FV ? (1/(1 + r ) ⁿ ).

b. Using the TVM keys or function from a calculator or spreadsheet.

4. Keiko is looking at the following investment choices and wants to know what interest rate each choice produces.

a. Invest $400 and receive $786.86 in ten years.

b. Invest $3,000 and receive $10,927.45 in fifteen years.

c. Invest $31,180.47 and receive $100,000 in twenty years.

d. Invest $31,327.88 and receive $1,000,000 in forty-five years.

5. Upstate Bank is offering long-term certificates of deposit with a face value of $100,000 (future value). Bank customers can buy these CDs today for $67,000 and will receive the $100,000 in fifteen years. What interest rate is the bank paying on these CDs?

Transcribed Image Text:

Present Value S 400.00 $17,411.00 $35,000.00 $26,981.75 Interest Rate 5.0% 6.0% 10% 16% Number of Periods Future Value 5 30 20 15 Future Value $ 900.00 $ 80,000.00 $350,000.00 $ 26,981.75 Interest Rate Number of Periods 5% 6% 10% 16% 5 30 20 15 Present Value ? ? ? ? Present Value S 400.00 $17,411.00 $35,000.00 $26,981.75 Interest Rate 5.0% 6.0% 10% 16% Number of Periods Future Value 5 30 20 15 Future Value $ 900.00 $ 80,000.00 $350,000.00 $ 26,981.75 Interest Rate Number of Periods 5% 6% 10% 16% 5 30 20 15 Present Value ? ? ? ?

Answer rating: 100% (QA)

1 Present Value Interest Rate Number of Periods Future Value 40000 50 5 51051 1741100 60 30 9999992 ... View the full answer