1 CM 426 Present Value and Future Value Problems Winter 2012 – Assignment 1 Create a spreadsheet using the FV and PV formulas discussed in class to solve the following problems. Show all dollar figures in a format with two significant digits after the decimal (for example 2,452.00 or $2,452.00). Do not round interest rates. Each correct answer is worth 1/2 point. COMPOUNDING 1. Find the future value at the end of 10 years of $2,500 deposited today into a savings account, if the interest rate is 3 percent compounded annually. 2. What if the interest rate is 3 percent compounded semi-annually? 3. What if the rate is 3 percent compounded monthly? 4. What if the rate is 3 percent compounded daily? (365-days per year) Carry periodic interest rate to 4 significant digits after the decimal point on your answer sheet. 5. John’s father invested $4,000 into the stock market when John was born in 1985. How much money will be in the account when John turns 60, if the return is a constant 7 percent, compounded annually? 6.
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