Question

Find the following values using the equations and then a financial calculator. Compounding/discounting occurs annually. Do not round intermediate calculations. Round your answers to the nearest cent.

a. An initial $600 compounded for 1 year at 6%.  

b. An initial $600 compounded for 2 years at 6%.

c. The present value of $600 due in 1 year at a discount rate of 6%.

d. The present value of $600 due in 2 years at a discount rate of 6%.

Answer 1

		Equation	Formula
a)	Future value	$                 636.00	$                   636.00
		=600*(1+6%)	=FV(6%,1,,-600)
b)	Future value	$                 674.16	$                   674.16
		=600*(1+6%)^2	=FV(6%,2,,-600)
c)	Present value	$                 566.04	$                   566.04
		=600/(1+6%)	=PV(6%,1,,-600)
d)	Present value	$                 534.00	$                   534.00
		=600/(1+6%)^2	=PV(6%,2,,-600)