Time value of money questions and solutions

-Find the FV of $10,000 invested now after five years if the annual interest rate is 8 percent.

a.What would be the FV if the interest rate is a simple interest rate?
b.What would be the FV if the interest rate is a compound interest rate?
-Determine the future values (FVs) if $5,000 is invested in each of the following situations:

a.5 percent for ten years
b.7 percent for seven years
c.9 percent for four years
-You are planning to invest $2,500 today for three years at a nominal interest rate of 9 percent with annual compounding.

a.What would be the future value (FV) of your investment?
b.Now assume that inflation is expected to be 3 percent per year over the same three-year period. What would be the investment’s FV in terms of purchasing power?
c.What would be the investment’s FV in terms of purchasing power if inflation occurs at a 9 percent annual rate?
-Find the present value (PV) of $7,000 to be received one year from now assuming a 3 percent annual discount interest rate. Also calculate the PV if the $7,000 is received after two years.

-Determine the present values (PVs) if $5,000 is received in the future (i.e., at the end of each indicated time period) in each of the following situations:

a.5 percent for ten years
b.7 percent for seven years
c.9 percent for four years
-Determine the present value (PV) if $15,000 is to be received at the end of eight years and the discount rate is 9 percent. How would your answer change if you had to wait six years to receive the $15,000?

-Use a financial calculator or computer software program to answer the following questions:

a.What would be the future value (FV) of $15,555 invested now if it earns interest at 14.5 percent for seven years?
b.What would be the FV of $19,378 invested now if the money remains deposited for eight years and the annual interest rate is 18 percent?