Question

In: Finance

Calculate the future value of a $4,000 CD earning 5.2% interest for 8 years under the...

Calculate the future value of a $4,000 CD earning 5.2% interest for 8 years under the following scenarios (use a calculator for the algebraic formula answer, check using the =FV function). (in Excel use =FV(i,n,0,(PV),0). Make PV negative because it is a cash out-flow.   (Use the EXP function for the continuous compounding problem.) Show what Algebraic Formula you use. Submit a screenshot of this sheet filled out with the algebraic calculations, and submit your excel spreadsheet with an identifiable name to the class canvas website.

                                                            Algebraic Formula Answer                Spreadsheet

A. Compounded yearly:                                 _____________                      ___________

B. Compounded twice a year                         _____________                      ___________

C. Compounded quarterly:                             _____________                      ___________

D. Compounded monthly                               _____________                      ___________

E. Compounded continuously                        _____________                      ___________

Solutions

Expert Solution

Algebraic formula

Future value = Initial amount*(1+Annual interest rate/Compoundings per year)^(Compoundings per year*Number of years)


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