Week 3 Checkpoint -- Present and Future Value

Week 3 Checkpoint -- Present and Future Value - Checkpoint:...

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Checkpoint: Present and Future Value Calculate the future value of the following: $5000 compounded annually at 6% for 5 yrs $5,000 x (1+0.06) 5 $5,000 x (1.06) 5 $5,000 x 1.338 $6,690 $5000 semiannually at 6% for 5 yrs $5,000 x [1 + (0.06 / 2)] 5(2) $5,000 x (1.03) 10 $5,000 x 1.344 $6,720 $5000 compounded quarterly at 6% for 5 yrs $5,000 x [1 + (0.06 / 4)] 5(4) $5,000 x (1.015) 20 $5,000 x 1.347 $6,735 $5000 compounded annually at 6% for 6 yrs $5,000 x (1+0.06) 6 $5,000 x (1.06) 6 $5,000 x 1.4185 $7,093 What conclusions can be drawn about the frequency of compounding interest? What conclusions can be drawn about the length of time an amount is compounding? The conclusion is that the more frequent the compound is and the longer you have the money there the more money you will have in the end.
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Calculate the present value of the following: $7000 in 5 yrs at an annual discount rate of 6% $7,000 / (1+0.06) 5 $7,000 / (1.06) 5 $7,000 / 1.338 $5,232 $7000 in 5 yrs at a semiannual discount rate of 6%
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This note was uploaded on 07/30/2011 for the course HCA 270 taught by Professor Kulick during the Spring '10 term at University of Phoenix.

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Week 3 Checkpoint -- Present and Future Value - Checkpoint:...

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