Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Suppose Jorge Otero has set up an
![**Table 12.2: Future Value of $1 at Compound Interest**
This table displays the future value of $1 invested at various compound interest rates over different periods. Each column represents a different interest rate, ranging from 9% to 18%, and each row corresponds to the number of periods the money is invested. The values in the table are calculated using the formula:
\[
\frac{(1 + i)^n - 1}{i(1 + i)^n}
\]
where \(i\) is the interest rate per period, and \(n\) is the total number of periods. Values are rounded to five decimal places.
### Table Breakdown:
- **Periods (Rows):** The number of compounding periods, from 1 to 36.
- **Interest Rates (Columns):** Each column displays the compound interest rate (9% to 18%).
For example, if you want to find the future value of $1 at a 12% interest rate compounded over 10 periods, you look at the intersection of the 12% column and the 10 periods row, resulting in a future value of approximately 3.10585.
### Example Rows:
- **Period 1:**
- 9%: 0.91743
- 10%: 0.90909
- 11%: 0.90090
- 12%: 0.89286
- ... up to 18%: 0.84746
- **Period 36:**
- 9%: 10.61176
- 10%: 9.67651
- 11%: 8.87589
- 12%: 8.19241
- ... up to 18%: 5.54120
This table is a useful reference for financial calculations involving compound interest, allowing one to quickly determine the value of an investment over time with different interest rates.](https://content.bartleby.com/qna-images/question/d201cd7c-f0d9-4cde-8ad3-a66bd40ce2a0/dae98649-9129-43f3-8d49-aab8b96527da/eveihi_processed.jpeg)
Transcribed Image Text:**Table 12.2: Future Value of $1 at Compound Interest**
This table displays the future value of $1 invested at various compound interest rates over different periods. Each column represents a different interest rate, ranging from 9% to 18%, and each row corresponds to the number of periods the money is invested. The values in the table are calculated using the formula:
\[
\frac{(1 + i)^n - 1}{i(1 + i)^n}
\]
where \(i\) is the interest rate per period, and \(n\) is the total number of periods. Values are rounded to five decimal places.
### Table Breakdown:
- **Periods (Rows):** The number of compounding periods, from 1 to 36.
- **Interest Rates (Columns):** Each column displays the compound interest rate (9% to 18%).
For example, if you want to find the future value of $1 at a 12% interest rate compounded over 10 periods, you look at the intersection of the 12% column and the 10 periods row, resulting in a future value of approximately 3.10585.
### Example Rows:
- **Period 1:**
- 9%: 0.91743
- 10%: 0.90909
- 11%: 0.90090
- 12%: 0.89286
- ... up to 18%: 0.84746
- **Period 36:**
- 9%: 10.61176
- 10%: 9.67651
- 11%: 8.87589
- 12%: 8.19241
- ... up to 18%: 5.54120
This table is a useful reference for financial calculations involving compound interest, allowing one to quickly determine the value of an investment over time with different interest rates.
![The table illustrates the future value factors for different interest rates over various periods. Each row corresponds to a specific period, and each column represents a different interest rate ranging from 1% to 8%. The values in the table are calculated using the formula
\[
\frac{(1 + i)^n - 1}{i(1 + i)^n}
\]
where \(i\) is the interest rate per period and \(n\) is the total number of periods. These values are rounded to five decimal places.
### Table of Future Value Factors
#### Columns
- **Interest Rates (%)**: 1%, 2%, 3%, 4%, 5%, 6%, 7%, 8%
#### Rows
- **Periods**: 1 to 36
### How to Use the Table
1. **Identify the Interest Rate**: Choose the column that matches your interest rate.
2. **Select the Period**: Locate the row that corresponds to the number of periods for investment or calculation.
3. **Find the Intersection**: The intersecting value is the future value factor for those conditions.
### Example Usage
- For a 5% interest rate over 10 periods, the future value factor is 7.72173.
- At 8% interest for 15 periods, the factor is 18.29129.
This table is a useful tool for financial computations involving time value of money, helping in calculating the future value of investments or loans.](https://content.bartleby.com/qna-images/question/d201cd7c-f0d9-4cde-8ad3-a66bd40ce2a0/dae98649-9129-43f3-8d49-aab8b96527da/fwldzea_processed.jpeg)
Transcribed Image Text:The table illustrates the future value factors for different interest rates over various periods. Each row corresponds to a specific period, and each column represents a different interest rate ranging from 1% to 8%. The values in the table are calculated using the formula
\[
\frac{(1 + i)^n - 1}{i(1 + i)^n}
\]
where \(i\) is the interest rate per period and \(n\) is the total number of periods. These values are rounded to five decimal places.
### Table of Future Value Factors
#### Columns
- **Interest Rates (%)**: 1%, 2%, 3%, 4%, 5%, 6%, 7%, 8%
#### Rows
- **Periods**: 1 to 36
### How to Use the Table
1. **Identify the Interest Rate**: Choose the column that matches your interest rate.
2. **Select the Period**: Locate the row that corresponds to the number of periods for investment or calculation.
3. **Find the Intersection**: The intersecting value is the future value factor for those conditions.
### Example Usage
- For a 5% interest rate over 10 periods, the future value factor is 7.72173.
- At 8% interest for 15 periods, the factor is 18.29129.
This table is a useful tool for financial computations involving time value of money, helping in calculating the future value of investments or loans.
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