value if the investment is made for two years.

FV one year

FV two years

Sum of FV's

Prob 9-2

Find the future value of $10,000 invested now after five years if the annual interest rate is 8 percent.

a. What would be the future value if the interest rate is a simple interest rate?

FV using simple interest

b. What would be the future value if the interest rate is a compound interest rate?

FV using compound interest

Prob 9-5 Find the present value of $7,000 to be received one year from now assuming a 3 percent annual discount interest rate. Also calculate

the present value if the $7,000 is received after two years.

PV received one year from now

PV received two years from now

Prob 9-10 Determine the present value now of an investment of $3,000 made one year from now and an additional $3,000 made two years

from now if the annual discount rate is 4 percent.

PV one year from now

PV two years from now

Prob 9-20 Use a financial calculator or computer software program to answer the following questions.

a. What is the present value of $359,000 that is to be received at the end of twenty-three years, the discount rate is 11 percent,

and semiannual discounting occurs?

PV w/ semi-annual discounting

b. How would your answer for (a) change if monthly discounting were used?

PV w/ monthly discounting

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## This question was asked on Jan 13, 2013 and answered on Jan 14, 2013.

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