Future Value and Present Value Assignment

Question 1:

Calculate the future value of an investment of $1,000, after 6 months, earning 6% APR, compounded monthly, by compounding manually.

Reminder: Be sure to show your work, and to calculate the period interest before solving.

Question 2:

Find the future value of a $150,000 Certificate of Deposit that pays compounded interest every six months at the rate of 4% per year. The CD has a term of 5 years.

a) Calculate the FV (Future Value) using the "Future Value or Compound Amount of $1.00" table in your textbook.

b) Calculate the FV (Future Value) using the formula: FV = P(1 + R)N

c) How much interest was earned on the investment?

Question 3:

You inherit $200,000 and decide to invest it for 28 days compounded daily at 6% annual interest. After the 28 days, you are going to invest your new found money in a startup business.

a) How much interest is earned on this investment?

b) How much money will you have to invest in the startup after the 28 days?

Question 4:

How much money must be invested into an account paying 6% annually, compounded annually, to have $500,000 in 25 years when I retire?

a) Calculate the PV (Present Value) using the "Present Value of $1.00" table in your textbook.

b) Calculate the PV (Present Value) using the formula: PV = FV / (1 +R)N

c) How much interest did you earn over the life of the investment?