# Wk1 Hw - 0 5 20 1000 1000 1000 1 1000 1050 1200 2 1000...

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a. Assuming a rate of 10% annually, find the FV of \$1,000 after 5 years. b. What is the investment’s FV at rates of 0%, 5%, and 20% after 0, 1, 2, 3, 4, and 5 years? c. Find the PV of \$1,000 due in 5 years if the discount rate is 10%. d. What is the rate of return on a security that costs \$1,000 and returns \$2,000 after 5 years? f. Find the PV of an ordinary annuity that pays \$1,000 each of the next 5 years if the interest rate is 15%. What is the annuity’s FV? a) FV = PV*(1 + i) n = 1000*(1.10) 5 = \$1,610.51 b) Year

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Unformatted text preview: 0% 5% 20% 1000 1000 1000 1 1000 1050 1200 2 1000 1102.50 1440 3 1000 1157.63 1728 4 1000 1215.51 2073.60 5 1000 1276.28 2488.32 c) PV = FV/ (1 + i) n = 1000/ (1.10) 5 = \$620.92 d) PV = FV/ (1 + i) n 1000 = 2000/ (1 + i) 5 (1 + i) 5 = 2 I = 14.87% f) PV = PMT*(PVIFA @ 15%, 5) = 1000*3.35216 = \$3,352.16 FV = PMT*(FVIFA @ 15%, 5) = 1000*6.74238 = \$6,742.38...
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Wk1 Hw - 0 5 20 1000 1000 1000 1 1000 1050 1200 2 1000...

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