Time Value of Money - Practice Midterm I

Time Value of Money - Practice Midterm I - Practice...

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Practice Examination Midterm I r = 6% y = 22 PV = 5,000 FV = ? FV = PV x FVIF FV = 5,000 x 3.6035 FV =  $18,017.50 r = 12% y = 22 PV = 5,000 FV = ? FV = PV x FVIF FV = 5,000 x 12.100 FV =  $60,500.00 No, because they are exponential, not linear. r = 14% y = ? PV = 7,500 FV = 90,420 FV = PV x FVIF 90,420 = 7,500 x FVIF FVIF = 90,420/7,500 FVIF = 12.06 Take look the Table Y = 19 r = ? y = 30 PV = 8,350 FV =250,000 FV = PV x FVIF 8,350 = 25,000 x FVIF Take look the Table FVIF = 29.94 r = 12% 1. [10] Draw the time line and solve for what $5,000 would be worth 22 years  from now if you could earn 6% interest. 2. [10] Draw the time line and solve for what $5,000 would be worth 22 years  from now is your could earn 12% interest. 3. [20] Is your answer to question 2 double your answer to question 1? Would  you expect it to be since the only difference between the two problems is that 
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This note was uploaded on 04/27/2009 for the course FRL 301 taught by Professor Carney during the Spring '08 term at Cal Poly Pomona.

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Time Value of Money - Practice Midterm I - Practice...

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