Question

Question 1: Use the time-value-of-money concepts to explain how much an investment of $2678 will grow to in 10 years at 10%compounded annually?

Question 2: What is the present value of $800 to be received in 10 years from now discounted back to the present at 8%?

Answer 1

Question 1)
CALCULATION OF THE FUTURE VALUE OF THE INVESTMENT IF THE INTEREST RATE IS @ 10%
Years	FV of $ 1 @ 10%
0	1.00000
1	1.10000
2	1.21000
3	1.33100
4	1.46410
5	1.61051
6	1.77156
7	1.94872
8	2.14359
9	2.35795
10	2.59374	""x"By	$2,678.00
	Future Value =	FVF of $ 1 at 10 years X Investment Value
	Future Value =	2.5937	"X "By	$2,678.00
	Future Value =	$6,946.04
Question 2)
CALCULATION OF THE PRESENT VALUE OF THE INVESTMENT IF THE INTEREST RATE IS @ 10%
Years	PV of $ 1 @ 8%
0	1.00000
1	0.92593
2	0.85734
3	0.79383
4	0.73503
5	0.68058
6	0.63017
7	0.58349
8	0.54027
9	0.50025
10	0.46319	""x"By	$800.00
	Present Value =	FVF of $ 1 at 10 years X Investment Value
	Present Value =	0.4632	"X "By	$800.00
	Present Value =	$370.55