Question

Calculate the future value in four years of $7,000 received today if your investments pay (Do not round intermediate calculations. Round your answers to 2 decimal places. (e.g., 32.16)) Future Value a. 5 percent compounded annually $ b. 7 percent compounded annually c. 9 percent compounded annually d. 9 percent compounded semiannually e. 9 percent compounded quarterly

Answer 1

		Future Value
a)	=7000*1.05^4 =	$       8,508.54
b)	= 7000*1.07^4 =	$       9,175.57
c)	= 7000*1.09^4 =	$       9,881.07
d)	= 7000*1.045^8 =	$       9,954.70
e)	= 7000*1.0225^16 =	$       9,993.35
	For compounding more than once in a year, the
	formula FV=PV*(1+r/m)^(m*n)
	where
	r = the annual rate of interest
	m = number of compounding periods within a year
	and n = the number of years.
	The above formula has been applied for questions
	[d] and [e].