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Unformatted text preview: initial principal of $1 on
deposit for 5 years at 6% interest compounded annually, FVIF6%, 5yrs, found in
Table A–1, is 1.338. Using Equation 4.6, $800 1.338 $1,070.40. Therefore,
the future value of Jane’s deposit at the end of year 5 will be $1,070.40. Input
PV 5 N 6 I
1070.58 Calculator Use4 The financial calculator can be used to calculate the future
value directly.5 First punch in $800 and depress PV; next punch in 5 and depress
N; then punch in 6 and depress I (which is equivalent to “i” in our notation)6;
finally, to calculate the future value, depress CPT and then FV. The future value
of $1,070.58 should appear on the calculator display as shown at the left. On
many calculators, this value will be preceded by a minus sign ( 1,070.58). If a
minus sign appears on your calculator, ignore it here as well as in all other “Calculator Use” illustrations in this text.7
Because the calculator is more accurate than the future value factors, which
have been rounded to the nearest 0.001, a slight difference—in this case,...
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