1- Future values. Fill in the future values for the following table using one of the three methods below:
a. Use the future value formula, FV equals PV times left parenthesis 1 plus r right parenthesis Superscript nFV=PV×(1+r)n.
b. Use the TVM keys from a calculator.
c. Use the TVM function in a spreadsheet.
|
Present Value
|
Interest Rate
|
Number of Periods
|
Future Value
|
|
?$ 217.00217.00
|
3.53.5?%
|
33
|
??
|
|
?$15 comma 385.0015,385.00
|
6.56.5?%
|
3838
|
??
|
|
?$35 comma 800.0035,800.00
|
1212?%
|
2424
|
??
|
|
?$26 comma 047.0026,047.00
|
1818?%
|
1212
|
??
|
|
Present Value
|
Interest Rate
|
Number of Periods
|
Future Value
|
|
?$ 217.00217.00
|
3.53.5?%
|
33
|
|
2- Future value.
Grand Opening Bank is offering a one-time investment opportunity for its new customers. A customer opening a new checking account can buy a special savings bond for $300300 today, which the bank will compound at 99% for the next ten years. The savings bond must be held for at least five years, but can then be cashed in at the end of any year starting with year five. What is the value of the bond at each cash-in date up through year ten? (Use an Excel spreadsheet to solve this problem.)
What is the value of the savings bond at the end of year five?
3- Present values.
Fill in the present values for the following table using one of the three methods below:
a. Use the present value formula, PV equals FV times StartFraction 1 Over left parenthesis 1 plus r right parenthesis Superscript n EndFractionPV=FV×1(1+r)n.
b. Use the TVM keys from a calculator.
c. Use the TVM function in a spreadsheet.
|
Future Value
|
Interest Rate
|
Number of Periods
|
Present Value
|
|
?$ 846.00846.00
|
4.54.5?%
|
66
|
??
|
|
?$ 86 comma 861.0086,861.00
|
88?%
|
3636
|
??
|
|
?$330 comma 607.00330,607.00
|
1111?%
|
2020
|
??
|
|
?$ 25 comma 384.1525,384.15
|
1616?%
|
1313
|
??
|
|
Future Value
|
Interest Rate
|
Number of Periods
|
Present Value
|
|
?$ 846.00846.00
|
4.54.5?%
|
66
|
|
4- Present value.
You are currently in the job market. Your dream is to earn a six-figure salary ($140 comma 000140,000).
You hope to accomplish this goal within the next 2929 years. In your field, salaries grow at 3.753.75% per year. What starting salary do you need to reach this goal?
What starting salary do you need to reach this goal?
5-Future value. You are a new employee with the Metro Daily Planet.
The Planet offers three different retirement plans. Plan 1 starts the first day of work and puts $1 comma 4001,400 away in your retirement account at the end of every year for 4040 years. Plan 2 starts after 10 years and puts away $1 comma 9001,900 every year for 3030 years. Plan 3 starts after 20 years and puts away $ 4 comma 400$4,400 every year for the last 2020 years of employment. All three plans guarantee an annual growth rate of 1212%.
a. Which plan should you choose if you plan to work at the Planet for 4040 years?
b. Which plan should you choose if you plan to work at the Planet for only the next 3030 years?
c. Which plan should you choose if you plan to work at the Planet for only the next 2020 years?
d. Which plan should you choose if you plan to work at the Planet for only the next 1010 years?
e. What do the answers in parts (a) through (d) imply about savings?
f. Which plan should you choose if you plan to work at the Planet for 4040 years?
A. Plan 1
Plan 1 because it offers the highest future value.
B. Plan 2
Plan 2 because it offers the highest future value.
C. Plan 3
Plan 3 because it offers the highest future value.
D. Any one of the three plans because they offer the same future value.