Question

What will be the future value?

(1). A lump-sum of $3000 now, in 5 years at 7% compounded annually.

(2). Series of payment: $3000 at the end of each year for 5 years at 7% compounded annually.

(3). $1000 at the end of the first year, then increase at a rate of $100 for the following 4 years. The interest rate of 7% compounded annually.

(4). $1000 at the end of the first year, then increase by 10% for the following 4 years. The interest rate of 7% compounded annually.

Answer #1

A lump sum payment of $1,000 is due at
the end of 5 years. The nominal interest rate is 10%, semiannual
compounding. Which of the following statements is/are
INCORRECT? Why?
a. The present
value of the $1,000 would be greater if interest were compounded
monthly rather than semiannually.
b. The periodic rate is greater than 5%.
c. The periodic interest rate is 5%.
d. The present
value would greater if the lump sum were discounted back for more
periods.
e. ...

SINGLE LUMP-SUM Below are four independent scenarios relating to
the investment of a single lump-sum amount. Calculate the future
value of each, using the algebraic formula illustrated in the
textbook. Then, verify your answer by reference to the “future
value of $1” table. If you have a “business” calculator,
additionally verify your calculations using the future value
functions included with your calculator.
a) An investment of $2,000 for 6 years and then also for 8
years, at a 6% annual...

What lump sum deposited today at 8% compounded quarterly for 5
years will yield the same final amount as deposits of $3000 at the
end of each 6-month period for 5 years at 4% compounded
semiannually?

Jeff has the opportunity to receive? lump-sum payments either
now or in the future. Which of the following opportunities is the?
best, given that the interest rate is 4?% per? year?
A. one that pays $ 900 now
B. one that pays $ 1080 in two years
C. one that pays $ 1350 in five years
D. one that pays $ 1620 in ten years

What is the future value of $100 invested at 10% compounded
annually for 3 years?
What is the future value of $100 invested at 10% compounded
annually for 10 years?
What is the present value of an investment that will give you
$100 after 10 years with a rate of 10% compounded annually?
You end up with $20,000 after investing for 20 years at 8%
annually. What was the PV?
Maverick Jane places $800 in a savings account paying 6%...

Year
End-of-Year Payment
1
$1400
2
$1320
3
$1240
4
$1190
5
$1000
What future sum, at time 5, is equivalent to the series of
payments in the table, at a 10% interest rate?
Select one:
a. $7616
b. $7660
c. $7212
d. $5995

Find the following values:
a. The future value of a lump sum of $6,000 invested today at 9
percent, annual compounding for 7 years.
b. The future value of a lump sum of $6,000 invested today at 9
percent, quarterly compounding for 7 years.
c. The present value of $6,000 to be received in 7 years when
the opportunity cost (discount rate) is 9%, annual compounding.
d. The present value of $6,000 to be received in 7 years when
the...

1. You expect to receive a lump
sum amount of $20,000 fifty years from now. But you want that money
now. So what is the present value of that sum if the current
discount rate is 7.5%? Assume annual compounding.
2. You have just purchased a $1,500 five year certificate of
deposit (CD) from a savings bank which will pay 3.5% interest
compounded monthly. What will that CD be worth at maturity?
3. Calculate the present value of an ordinary...

What is the future value at the end of year 5 of a series of 3
deposits? The first deposit occurs at the end of year 3 and is
$800. The remaining deposits increase by $150/year (so the last
deposit will be $1100 and will occur at the end of year 5) . Assume
i = 7.4% compounded annually.

Suppose the opportunity cost of capital is 5% and you have just
won a $750,000 lottery that entitles you to
$75,000 at the end of each year for the next 10 years.
What is the minimum lump sum cash payment you would be willing
to take now in lieu of the IO-year annuity?
What is the minimum lump sum you would be willing to accept at
the end of the 10 years in lieu of the annuity?
Using the appropriate...

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