#3

A) N= 3, i= 4, PV= $12,000
Find Future Value:
FV= $13,498.37; Once Megan is a senior, her books will have totaled to
a cost of $13,498.37.
B) N= 2, I= 3, FV= $5,000
Find Present Value:
PV= $4,712.98; If Megan received this $5,000 scholarship at the end of
next year, it would be worth $4,712.98 at this time.
C) N= 3, I=6, PMT= $2,400
Find Future Value:
FV= $7,640.64; If Meg invests this money each year, then after 3 years it
will posses a value of $7,640.64
D) N= 3, I=2, PMT= $1000
Find Present Value:
PV= $2,883.88; The present value of the stream of payments from
Megan's aunt is $2,883.88
#4
A) N=4, I= 5, PV= $4000
Find Future Value:
FV= $4,862.03; The Future Value of of lump-sum investment of $4,000
in 4 years is $4,862.03 (at 5%)
B) N=3, I=6, PMT= $1500
Find Future Value:
FV= $4,775.40; According to the information provided by the table, the
Future Value of $1,500 saved each year for 3 years is $4,862.03 (at 6% )
#5

B) Choose $5,000 now or $8,000 in 5 years at 8%?

N= 5 I = 8 PV= $5,000; So FV= $7,346.64
N= 5 I = 8 FV= $8,000; So PV= $5,444.67
Choose $8,000 in 5 years because its present value and its $8,000 (FV) is
more than the $5,000 (PV) option.
#8
If you wanted $1,000 to double with 2% interest it would take 36 years,
18 years at 4%, 12 years at 6%, 9 years at 8%, and 7.2 years at 10%.
#Personal TVM:
If my little brother, John, stashes away $1,800 each year for his senior trip, how
much will he have in 5 years at a 3% interest rate when it's time to go on the trip?
N= 5, I=3, PMT= $1,800; FIND FV:
Future Value= $9,556.44; My little brother, John, will have
$9,556.44 to spend on his senior trip in 5 years.