Table use in a manner similar to our approach above

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Unformatted text preview: r 12 years is 0.397—almost exactly the 0.400 value. Therefore, the number of years necessary for the $1,000 to grow to a future value of $2,500 at 8% is approximately (to the nearest year) 12. Input 1000 Function PV 2500 FV I 8 CPT N Solution 11.91 Calculator Use Using the calculator, we treat the initial value as the present value, PV, and the latest value as the future value, FVn. (Note: Most calculators require either the PV or the FV value to be input as a negative number to calculate an unknown number of periods. That approach is used here.) Using the inputs shown at the left, we find the number of periods to be 11.91 years, which is consistent with, but more precise than, the value found above using Table A–2. Spreadsheet Use The number of years for the present value to grow to a specified future value also can be calculated as shown on the following Excel spreadsheet. CHAPTER 4 Time Value of Money 167 Another type of number-of-periods problem involves finding the number of periods associated with an annuity. Occasionally we wish to find the unknown life, n, of an annui...
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This document was uploaded on 03/03/2014 for the course MBA BMMF at Open University Malaysia.

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