Question

What is the future value of $10,000 in 8 years at 8%, compounded quarterly?

What is the present value of $15,500 received in 10 years if interest of 1% is compounded monthly?

What is the present value of $22,000 received in 5 years if interest of 1% is compounded quarterly?

Answer 1

1. What is the future value of $10,000 in 8 years at 8%, compounded quarterly?

Number of quarters, n = 8 * 4 = 32

r = 8%/4 = 2% = 0.02

FV = PV * (1 + r)^n

FV = 10,000 * (1 + 0.02)^32

FV = $18,845.4059210113

2. Monthly interest rate, r = 1%/12 = 0.0008333333333

Number of months, n = 10 * 12 = 120

PV = FV/(1 + r)^n

PV = 15,500/(1 + 0.0008333333333)^120

PV = $14,025.5640414908

3. What is the present value of $22,000 received in 5 years if interest of 1% is compounded quarterly?

r = 1%/4 = 0.0025

n = 5 * 4 = 20

PV = FV/(1 + r)^n

PV = 22,000/(1 + 0.0025)^20

PV = $20,928.3531443909