Problem 52 Calculating Future Values LO1 1 Compute the futur

Problem 5-2 Calculating Future Values [LO1] 1. Compute the future value. Calculating Future Values Excel HOME INSERT PAGE LAYOUT FORMULAS DATA REVIEW VIE Sign In 11A A ast A. Alignment Number Conditional Format as siCell Cells Editing Paste Formatting. Table\" Styles . Clipboard Font Styles H11 G H For each of the following,compute the future value: Complete the following analysis. Do not hard code values in your answers. All answers should be positive values. Present value Years Interest rate Future value 10 8,752 76,355 183,796 9% 12% 6% 12 13 14 15 16 17 14 8

Solution

(i) Present value = $2,250

Time (n)= 11 years

Interest rate (r) = 13%

Future value = Present value (1 + r )ⁿ

  = 2,250 (1 + 0.13)¹¹

= 2,250 (1.13)¹¹

= 2,250 x 3.8358

= $8,630

(ii) Present value = $8,752

Time (n)= 7 years

Interest rate (r) = 9%

Future value = Present value (1 + r )ⁿ

  = 8,752 (1 + 0.09)⁷

= 8,752 (1.09)⁷

= 8,752 x 1.828

= $16,000

(iii) Present value = $76,355

Time (n)= 14 years

Interest rate (r) = 12%

Future value = Present value (1 + r )ⁿ

  = 76,355 (1 + 0.12)¹⁴

= 76,355 (1.12)¹⁴

= 76,355 x 4.887

= $373,155

(iv) Present value = $183,796

Time (n)= 8 years

Interest rate (r) = 6%

Future value = Present value (1 + r )ⁿ

  = 183,796 (1 + 0.06)⁸

= 183,796 (1.06)⁸

= 183,796 x 1.5938

= $292,942