Question

    

a. The future value of $410 four years from now at 9 percent. (Round your answer to 2 decimal places.)

b. The future value of $250 saved each year for 9 years at 6 percent. (Round your answer to 2 decimal places.)  

c. The amount a person would have to deposit today (present value) at an interest rate of 7 percent to have $3,000 five years from now. (Round your answer to 2 decimal places.)

d. The amount a person would have to deposit today to be able to take out $500 a year for 10 years from an account earning 6 percent. (Round your answer to 2 decimal places.)

Answer 1

a). Calculating the Future Value of $410 from Now:-

where, Invested Amount = $410

r = Periodic Interest rate =9%

n= no of periods = 4

Future Value = $410*1.41158161

Future Value = $578.75

b). Calculating the Future Value of $250 saved each year using Future Value of Ordinary Annuity formula:-

Where, C= Periodic Deposits =$250

r = Periodic Interest rate = 6%

n= no of periods = 9

Future Value = $287.83

c). Calculating the Present Value of $3,000 received 5 years from now:-

where, Future Value = $3,000

r = Periodic Interest rate =7%

n= no of periods = 5

Present Value = $2138.96

d). Calculating the Present Value of $500 each year using Present Value of Ordinary Annuity formula:-

Where, C= Periodic Payments = $500

r = Periodic Interest rate = 0.06

n= no of periods = 10

Present Value = $3680.04

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