Finance Lectures, tests and solutions

# Finance Lectures, tests and solutions - Tutorial Chapter 3...

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Tutorial Chapter 3 1. Future Values . Fill in the future values for the following table, a. using the future value formula, FV = PV × (1 + r ) n . b. using the time value of money keys or function from a calculator or spreadsheet. Present Value Interest Rate Number of Periods Future Value \$ 400.00 5.0% 5 \$17,411.00 6.0% 30 \$35,000.00 10% 20 \$26,981.75 16% 15 2. Future Value (with changing years). Dixie Bank offers a certificate of deposit with an option to select your own investment period. Jonathan has \$7,000 for his CD investment. If the bank is offering a 6% interest rate, how much will the CD be worth at maturity if Jonathan picks a a. two-year investment period? b. five-year investment period? c. eight-year investment period? d. fifteen-year investment period? 3. Future Value (with changing interest rates). Jose has \$4,000 to invest for a two-year period. He is looking at four different investment choices. What will be the value of his investment at the end of two years for each of the following potential investments? a. bank CD at 4%. b. bond fund at 8%. c. mutual stock fund at 12%. d. new venture stock at 24%. 7. Future Value . Upstate University charges \$16,000 a year in graduate tuition. Tuition rates are growing at 4.5% each year. You plan on enrolling in graduate school in five years. What is

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## This note was uploaded on 10/11/2011 for the course BUSINESS 2415 taught by Professor Dr.burke during the Fall '11 term at AIB College of Business.

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Finance Lectures, tests and solutions - Tutorial Chapter 3...

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