Chapter 05 Future Values Single Amount.pdf

Chapter 05 Future Values Single Amount.pdf - Chapter 05...

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2/10/2019 Chapter 05 Homework-Madelyn Stephens 1/2 Student: Madelyn Stephens Date: 2/10/19 Instructor: George Bernard Course: FIN 3403 - FULL TERM - SPRING 2019 Assignment: Chapter 05 Homework Future values For the case shown in the following table, calculate the future value of the single cash flow deposited today at the end of the deposit period if the interest is compounded annually at the rate specified. (Click on the icon located on the top-right corner of the data table below in order to copy its contents into a spreadsheet.) Single cash flow Interest rate Deposit period (years) $26,000 % 4 23 The general equation for the future value at the end of period n is: , = ( ) FV n PV 1 + r n where future value at the end of period n FV n = PV initial principal, or present value = r annual rate of interest paid = n number of periods that the money is left on deposit = Substituting PV $ , i , and n into the future value equation gives the amount at the end of year : = 26,000 = 0.04 = 23 23 . = $26,000 ( ) = $64,082.60 FV 23 1 + 0.04 23
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