For each of the following compute the future value Do not ro

For each of the following, compute the future value: (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Interest Future Value Present Value Years Rate 12% 10 $ 2,050 12 8,3526 2,355 13 179,796 7

Solution

We use the formula:

A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period

a.

1.

A=$2050*(1.12)^12

=$2050*3.895975993

=$7986.75(Approx).

2.

A=8352*(1.1)^6

=$8352*1.771561

=$14796.08(Approx).

3.

A=72355(1.11)^13

=$72355*3.883280163

=$280974.74(Approx).

4.

A=179796*(1.07)^7

=$179796*1.605781476

=$288713.09(Approx).

b.

1.

1488=550(1.1)^n

(1488/550)=(1.1)^n

Taking log on both sides;

log(1488/550)=n*log 1.1

n=log(1488/550)/log 1.1

=10.44 years(Approx).

2.

1922=800(1.11)^n

(1922/800)=(1.11)^n

Taking log on both sides;

log(1922/800)=n*log 1.11

n=log(1922/800)/log 1.11

=8.40 years(Approx).

3.

244179=18300(1.16)^n

(244179/18300)=(1.16)^n

Taking log on both sides;

log(244179/18300)=n*log 1.16

n=log(244179/18300)/log 1.16

=17.46 years(Approx).

4.

290433=21400(1.13)^n

(290433/21400)=(1.13)^n

Taking log on both sides;

log(290433/21400)=n*log 1.13

n=log(290433/21400)/log 1.13

=21.34 years(Approx).