Question

If you invest $17,000 today, how much will you have in each of the following instances? Use Appendix A as an approximate answer, but calculate your final answer using the formula and financial calculator methods.

a. In 6 years at 7 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Future Value=?

b. In 20 years at 9 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Future Value=?

c. In 18 years at 12 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Future Value=?

d. In 10 years at 12 percent (compounded semiannually)? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Future Value=?

Answer 1

a.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=$17000*(1.07)^6

=$17000*1.500730352

=$25512.42(Approx).

b.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=$17000*(1.09)^20

=$17000*5.604410768

=$95274.98(Approx).

c.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=$17000*(1.12)^18

=$17000*7.689965795

=$130,729.42(Approx).

d.We use the formula:
A=P(1+r/2)^2n
where
A=future value
P=present value
r=rate of interest
n=time period.

A=$17000*(1+0.12/2)^(2*10)

=$17000*3.207135472

=$54521.30(Approx).