You invest 2500 a year for three years al 8 percent a What i

You invest $2,500 a year for three years al 8 percent. a. What is the value of your investment after one year? Multiply $2,500 times 1.08. b. What is the value of your investment after two years? Multiply your answer to part a by 1.08. c. What is the value of your investment after three years? Multiply your answer to part b by 1.08. This gives your final answer. d. Confirm that your final answer is correct by going to Appendix A (figure value of $1), and looking up the future value for n = 3, and i = 8 percent. Multiply this tabular value by $2,500 and compare your answer to the answer to the answer in part c. There may be a slight difference due to rounding. 2. What is the present value of: a. $8,000 in 10 years at 6 percent? b. $16,000 in 5 years at 12 percent? c. $25,000 in 15 years at 8 percent? 3. a. What is the present value of $100,000 to be received after 40 year with an 18 percent discount rate? b. Would the present value of the funds in part a be enough to buy a $140 concert ticket? 4. You will receive $4,000 three years from now. The discount rate is 10 percent.

Solution

Answer:1

a. FV=2500*1.08=2700

b. 2700*1.08=2916

c. 2916*1.08=3149.28

d. 2500*FVIF(8%,3)

=3149.25