3131 Chapter 6 Examples
1. $1000 is put on deposit today to earn 6% compounded annually.
What is the value of this investment at the
end of 8 years?
1593.85
2.
If you wish to be able to withdraw the sum of $8000 at the end of 12 years how much do you have to deposit
today (assuming interest is compounded annually at 6%)?
3975.76
3.
If $400 is put in a savings account at the end of each year for 5 years, how much will you have at the end of
5 years (assuming 6% interest compounded annually)?
2254.84
4.
If $400 is put in a savings account at the beginning of each year for 5 years, how much will you have at the
end of 5 years (assuming 6% interest compounded annually)? 2390.13
5.
What dollar amount today is equivalent to receiving $1000 10 years from now using a 7% interest rate
(compounded annually)?
?
6.
What is the future value of an ordinary annuity of $100 per period for 6 years at 7% compounded annually?
715.35
7.
What amount can be withdrawn at the end of each period for 5 years if $1000 is deposited now and all
deposits earn 6% compounded annually.
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 Spring '08
 ROTELLA
 Financial Accounting, Time Value Of Money, Mortgage loan, Deposit account

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