1. What is the future value of $2,000 invested today if it earns 10% interest for two years?
FV= 2,420.00
2. What is the future value of $6,000 invested today if it earns 8% for 10.5 years with quaterly
compounding?
...
1. What is the future value of $2,000 invested today if it earns 10% interest for two years?
FV= 2,420.00
2. What is the future value of $6,000 invested today if it earns 8% for 10.5 years with quaterly
compounding?
FV= 13,783.47
3. What is compounding? What’s the difference between simple interest and compound
interest?
4. What would the future value of $100 be after 5 years at 10% compound interest? at 10%
simple interest? ($161.05; $150.00)
5. Suppose you currently have $2,000 and plan to purchase a 3-year certificate of deposit (CD)
that pays 4% interest compounded annually. How much will you have when the CD
matures? ($3,456.00)
6. A company’s sales in 2008 were $100 million. If sales grow at 8%, what will they be 10 years
later, in 2018? ($215.89 million)
7. What is the present value of $2,000 to be received 2 years from today when the annual
discount rate is 10%?
PV= $1,652.89
8. Suppose a U.S. government bond promises to pay $2,249.73 three years from now. If the
going interest rate on three-year government bonds is 4%, how much is the bond worth
today? How would your answer change if the bond matured in 5 years rather than 3? What
if the interest rate on the 5-year bond was 6% rather than 4%? ($2,000; $1,849.11;
$1,681.13)
9. How does the present value of a future payment change as the time to receipt is
lengthened? as the interest rate increases?
10. What is the present value of $500 to be received 10.5 years from today when the annual
discount rate is 8%?
PV= $222.85
11. Suppose Capitol Federal Bancorp offers a certificate of deposit that pays $10,000 in five
years for exchange for $8,000 today. What interest rate is Capitol Federal Bancorp offering?
i= 4.56%
12. Microsoft earne
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