1. If you deposit $10 in an account that pays an interest of 5%, compounded annually, how much will you have at the end of 10 years? 50 years? 100 years? 2. Complete the following table solving for the present value PV: FV $10,000 $563,000 $5000 Case A. No. of periods Interest rate 5% 4% 5.5% PV 7835 20 C 3 3. Suppose you want to have $ 0.5 million saved by the time you reach age 30 and suppose that you are 20 years old now. If you can earn 5% on your funds, how much would you have to invest today to reach your goal? 5 million 4. How much would you have to deposit in an account today that pays 12% interest, compounded quarterly, so that I have a balance of $20,000 in the account at the end of 10 years? - 6131 5. Calculate the present value of an annuity-immediate of amount $200 paid annually for 10 years at the rate of interest of 12% per annum. Also calculate its future value at the end of 10 years. PV- 1130
1. If you deposit $10 in an account that pays an interest of 5%, compounded annually, how much will you have at the end of 10 years? 50 years? 100 years? 2. Complete the following table solving for the present value PV: FV $10,000 $563,000 $5000 Case A. No. of periods Interest rate 5% 4% 5.5% PV 7835 20 C 3 3. Suppose you want to have $ 0.5 million saved by the time you reach age 30 and suppose that you are 20 years old now. If you can earn 5% on your funds, how much would you have to invest today to reach your goal? 5 million 4. How much would you have to deposit in an account today that pays 12% interest, compounded quarterly, so that I have a balance of $20,000 in the account at the end of 10 years? - 6131 5. Calculate the present value of an annuity-immediate of amount $200 paid annually for 10 years at the rate of interest of 12% per annum. Also calculate its future value at the end of 10 years. PV- 1130
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Transcribed Image Text:Topic: Time Value of Money and Annuity
1. If you deposit $10 in an account that pays an interest of 5%, compounded
annually, how much will you have at the end of 10 years? 50 years? 100
years?
2. Complete the following table solving for the present value PV:
Case
FV
Interest rate
5%
No. of periods
PV
$10,000
$563,000
$5000
A.
5
7835
4%
20
5.5%
3
3. Suppose you want to have $ 0.5 million saved by the time you reach age 30 and suppose
that you are 20 years old now. If you can eam 5% on your funds, how much would you
have to invest today to reach your goal?
5 million
4. How much would you have to deposit in an account today that pays 12% interest,
compounded quarterly, so that I have a balance of $20,000 in the account at the end of 10
years?
= 6131
5. Calculate the present value of an annuity-immediate of amount
$200 paid annually for 10 years at the rate of interest of 12% per annum. Also calculate
its future value at the end of 10 years.
PV= 1130
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