et's start with basic Future Value problems. In this case, we want to determine the future value of an amount deposited today, given an interest rate and the number of time periods. Be sure to use compound interest (interest rate applies to both principal and interest previously earned) versus simple interest (interest rate applies to only the principal). 1. Assume that you have $10,000 in a bank account that pays a guaranteed 5% interest each year. How much would you have at the end of Year 3? How would your answer change if the interest rate were 3% or 6% or 9? Given the 5% interest rate, how would your answer change if the holding period were 2 years, or 5 years, or 7 years? 2. Suppose you currently have $10,000 and plan to purchase a 5-year certificate of deposit (CD) at your local bank that pays 4% interest, compounded annually. How much will you have when the CD matures? How would your answer change if the interest rate were 5%, or 6%, or 20%? Given the interest rate of 4%, how would your answer change if the CD term were 2-years or 3-years, or 10-years?