You have new items in your feed. Click to view.
Question and answer
3. Computing the Time Value of Money. Using time value of money tables, calculate the following. a. The future value of $450 six years from now at 7 percent. b. The future value of $800 saved each
year for 10 years at 8 percent. c. The amount a person would have to deposit today (present value) at a 6 percent interest rate to have $1,000 five years from now. d. The amount a person would have to deposit today to be able to take out $500 a year for 10 years from an account earning 8 percent.
The answer is a. The future value of $450 six years from now at 7 percent.
Expert answered|bongche|Points 1674|
Question
Asked 4/22/2012 12:52:27 AM
Updated 4/17/2013 4:55:36 PM
1 Answer/Comment
Get an answer
New answers
Rating
0
Solution:
F = P (1 + i)^n
a. The future value of $450 six years from now at 7 percent.

F = 450 * 1.07^6 = $ 675.33

b. The future value of $800 saved each year for 10 years at 8 percent.
each year saving, A = $800
F = A[(1+i)^n - 1]/i = 800 [1.08^10 -1]/ 0.08 = $11,589.25

c. The amount a person would have to deposit today (present value) at a 6 percent interest rate to have $1,000 five years
from now.
F = P(1+i)^n
1000 = P* 1.06^5
P = $747.26 (the present value)

d. The amount a person would have to deposit today to be able to take out $500 a year for 10 years from an account earning
8 percent

P(1+i)^n = A[(1+i)^n - 1]/i
P * 1.08^10 = 500 [1.08^10 -1]/0.08
P = $15,637.70 (amount to be deposited today)
Added 4/17/2013 4:55:36 PM
Comments

There are no comments.

Add an answer or comment
Log in or sign up first.
26,557,088 questions answered
Popular Conversations
A student is comparing and contrasting two dramas and plans to write ...
Weegy: B. point to point. User: Which sentence is written with parallel structure? A. It was both a unique play ...
12/3/2016 10:02:47 AM| 3 Answers
The characteristic that results from a monohybrid cross is the _____ ...
Weegy: The characteristic that results from a monohybrid cross is the recessive trait.
12/3/2016 1:12:13 AM| 1 Answers
Which of the following is an example of genetic drift? User: Which ...
Weegy: d. Warm temperatures cause green, brown, and black beetles to start reproducing earlier than normal. User: ...
12/3/2016 1:54:02 AM| 1 Answers
The evolution of the eohippus into the modern day horse is an example ...
Weegy: The evolution of the eohippus into the modern day horse is an example of Character change. User: Which of the ...
12/3/2016 2:26:24 AM| 1 Answers
Select all of the answers that apply. What are the possible causes ...
Weegy: Two prominent theories of extinction are climate change and an asteroid hitting the Earth. User: possibly ...
12/3/2016 2:32:14 AM| 1 Answers
Weegy Stuff
S
P
Points 147 [Total 419] Ratings 1 Comments 137 Invitations 0 Offline
S
Points 23 [Total 23] Ratings 0 Comments 23 Invitations 0 Offline
S
P
P
Points 21 [Total 700] Ratings 0 Comments 21 Invitations 0 Offline
S
P
Points 18 [Total 450] Ratings 0 Comments 18 Invitations 0 Offline
S
Points 16 [Total 292] Ratings 0 Comments 16 Invitations 0 Offline
S
Points 10 [Total 32] Ratings 0 Comments 0 Invitations 1 Offline
S
Points 8 [Total 8] Ratings 0 Comments 8 Invitations 0 Offline
S
Points 0 [Total 0] Ratings 0 Comments 0 Invitations 0 Offline
S
Points 0 [Total 0] Ratings 0 Comments 0 Invitations 0 Offline
S
Points 0 [Total 0] Ratings 0 Comments 0 Invitations 0 Offline
* Excludes moderators and previous
winners (Include)
Home | Contact | Blog | About | Terms | Privacy | © Purple Inc.