1. What is the future value of $20,000 invested today if it earns 10% interest for 5 years?

FV= PV ( 1 + r ) t
PV 20000
t 5
r 10%
(1+r)t 1.611

FV= 20000(1.611)
FV= 32,220

2. What is the future value of $2,000 invested today if it earns 10% interest for 10 years?

FV= PV ( 1 + r ) t
PV 2000
t 10
r 10%
(1+r)t 2.594

FV= 2000(2.594)
FV= 5,188

3. What is the future value of $6,000 invested today if it earns 8.5% interest for seven Years?
FV= PV ( 1 + r ) t
PV 6000
t 7
r 8.50%
(1+r)t 1.77

FV= 6,000 (1.770)

FV= 10,620

1.       Consider the following future value problem. The respective cash flows for t = 0, 1, 2, and 3 are $10,000, 12,000, 8,0
15,000 and the discount rate is ten percent. What is the future value at t = 4?

Presnet Future
value value
t Year rate (1 + .r )t
0 10,000 4 0.1 1.386 13860
1 12,000 3 0.1 1.277 15324
2 8,000 2 0.1 1 9416
3 15,000 1 0.1 1.085 16275
54875
1. An investor deposits $500 into his credit union account that pays interest at the rate of 10% per year (payable at the e
each year). He leaves the money and all accrued interest in the account for 10 years. How much will he have at the end o
years?
FV= PV ( 1 + r ) t
PV 500
t 7
r 10.00%
(1+r)t 1.77

FV= 500 (1.770)

FV= 885
 1 1.085
2 1.177
3 1.277
4 1.386
5 1.504
6 1.631
7 1.770
8 1.921
9 2.084
10 2.261

are $10,000, 12,000, 8,000, and

1 1.085
2 1.177
3 1.277
4 1.386
5 1.504
6 1.631
7 1.770
 8 1.921
er year (payable at the end of
will he have at the end of the 7
9 2.084
10 2.261