Determining the Time Value of Money. Using a future value calculator available on the internet or the formula or the tables included in the Chapter 1 Appendix, complete the following table. Then answer the questions that follow the table. Hint: To calculate the total amount of interest or earnings, subtract the amount of your total investment from the value at the end of the time period.

Annual

Deposit

Rate of

Return

Number of Years

Investment Value at the End of Time Period

Total Amount of Investment

Total

Amount of Interest or Earnings

$2,000

5%

10

$25,156

$20,000

$ 5,156

$2,000

9%

10

$30,386

$20,000

$10,386

$2,000

5%

20

$66,132

$40,000

$26,132

$2,000

9%

20

$102,320

$40,000

$62,320

a. In the above situations, describe the effect that the rate of return has on the investment value at the end of the selected time period.

Simply put, the higher the rate of return, the larger the investment value at the end of the investment period and the larger the amount of interest or earnings. Caution: You may want to review the risk-return tradeoff while discussing this question.