Question

Calculate the following time value of money: If I am to receive $10k in 5 years, given a 5% rate of return, what would be the present value of this amount? If I put $7k into the bank @ 3% interest for 10 years, what is the future value of this amount? If I deposit $1k a year into an account for 10 years @ 2%, what is the future value of that account? What is the FUTURE value of $1k a year (deposited $1k for each year) deposited for 10 years @ 4% interest?

Answer 1

If I am to receive $10k in 5 years, given a 5% rate of return, what would be the present value of this amount?

Present value of money:	=	FV/ (1+r) ^N
Future value	FV=	$               10,000
Rate of interest	r=	5%
Number of years	N=	5
Present value	=	10000/ (1+0.05)^5
	=	$            7,835.26

If I put $7k into the bank @ 3% interest for 10 years, what is the future value of this amount?

Future value	FV=	PV × (1+r)^N
Where as:
Present value	PV=	7,000
Rate of interest	r=	3.00%
Number of years	N=	10.00
Future value	FV=	7000 × (1+0.03)^10
	FV=	9,407.41

If I deposit $1k a year into an account for 10 years @ 2%, what is the future value of that account?

FV of annuity	=	P * [ (1+r)^n -1 ]/ r
Periodic payment	P=	$                1,000.00
rate of interest per period	r=
Rate of interest per year		2.0000%
Payment frequency		Once in 12 months
Number of payments in a year		1.00
rate of interest per period		0.02*12/12	2.0000%
Number of periods
Number of years		10
Number of payments in a year		1
Total number of periods	n=	10
FV of annuity	=	1000* [ (1+0.02)^10 -1]/0.02
FV of annuity	=	10,949.72

What is the FUTURE value of $1k a year (deposited $1k for each year) deposited for 10 years @ 4% interest?

FV of annuity	=	P * [ (1+r)^n -1 ]/ r
Periodic payment	P=	$                1,000.00
rate of interest per period	r=
Rate of interest per year		4.0000%
Payment frequency		Once in 12 months
Number of payments in a year		1.00
rate of interest per period		0.04*12/12	4.0000%
Number of periods
Number of years		10
Number of payments in a year		1
Total number of periods	n=	10
FV of annuity	=	1000* [ (1+0.04)^10 -1]/0.04
FV of annuity	=	12,006.11

please rate.