Question

Find the future value (compound amount) and the compound interest, as indicated, for each of the following investments. Round answers to the nearest cent. Use a calculator or Table 16-1 to find FVF. Please show entire solution for each question. Thank you!

Present Value Rate Term                   Future Value (Compound Interest

2. $960 6% compounded semiannually                  11 years ______ ________

4. $10,800 10% compounded annually                        40 years _______ _______

6. $14,450           6% compounded quarterly                         4 years _______ _________

Answer 1

Question 2

Future value = Present Value * FVF(rate, years)

                  = 960 * FVF(6%/2, 11*2)

                  = 960 * FVF(3%, 22)

                  = 960 * [ 1.03²² ]

                  = 960 * 1.9161

                  = $ 1,839.46 Answer

Question 4

Future value = Present Value * FVF(rate, years)

                  = 10800 * FVF(10%, 40)

                  = 10800 * [ 1.10⁴⁰ ]

                  = 10800 * 45.2593

                  = $ 488,799.96 Answer

Question 6

Future value = Present Value * FVF(rate, years)

                  = 14450 * FVF(6%/4, 4*4)

                  = 14450 * FVF(1.50%, 16)

                  = 14450 * [ 1.015¹⁶ ]

                  = 14450 * 1.269

                  = $ 18,336.84 Answer