finance lab week 3
FIN 370 Lab Study Guide - All Weeks - Additional Formula
(Compound interest) to what amount will the following investments accumulate?
a. $5,000 invested for 10 years at 10 percent compounded annually
5000 x (1.10)^10 = 5000 x2.5937 =12968.5
b. $8,000 invested for 7 years at 8 percent compounded annually
8000 x (1.08)^7 = 8000 x 1.7138 = 13710.59
c. $775 invested for 12 years at 12 percent compounded annually
775 x (1.12)^12 = 775 x3.8959 =3019.38
d. $21,000 invested for 5 years at 5 percent compounded annually
21000 x (1.05)^5 =21000x 1.2762 =26801.91
(Compound value solving for n) How many years will the following take?
a. $500 to grow to $1,039.50 if invested at 5 percent compounded annually
500/1039.5 =.481
Lookup .48 under 5% in pv of $1 table = 15 years
b. $35 to grow to $53.87 if invested at 9 percent compounded annually
35/53.87 =.649
Lookup .649 under 9% in pv of $1 table = 5 years
c. $100 to grow to $298.60 if invested at 20 percent compounded annually
100/298.6 =.3348
Lookup .3348 under 20% in pv of $1 table = 6 years
d. $53 to grow to $78.76 if invested at 2 percent compounded annually
53/78.76 =.6729
Lookup .6729 under 2% in pv of $1 table = 20 years
(Present value) what is the present value of the following future amounts?
a. $800 to be received 10 years from now discounted back to the present at 10 percent
800/(1.10)^10 = 308.43
b. $300 to be received 5 years from now discounted back to the present at 5 percent
300/(1.05)^5 = 235.06
c. $1,000 to be received 8 years from now discounted back to the present at 3 percent
1000/(1.03)^8 = 789.41
d. $1,000 to be received 8 years from now discounted back to the present at 20 percent
1000/(1.2)^8 = 232.56
(Present value of an annuity) what is the present value of the following annuities?
a. $2,500 a year for 10 years discounted back to the present at 7 percent
2500 x {1-(1/1.07)10}/.07 = 2500 x 7.02 =17550
b. $70 a year for 3 years discounted back to the present at
(Compound interest) to what amount will the following investments accumulate?
a. $5,000 invested for 10 years at 10 percent compounded annually
5000 x (1.10)^10 = 5000 x2.5937 =12968.5
b. $8,000 invested for 7 years at 8 percent compounded annually
8000 x (1.08)^7 = 8000 x 1.7138 = 13710.59
c. $775 invested for 12 years at 12 percent compounded annually
775 x (1.12)^12 = 775 x3.8959 =3019.38
d. $21,000 invested for 5 years at 5 percent compounded annually
21000 x (1.05)^5 =21000x 1.2762 =26801.91
(Compound value solving for n) How many years will the following take?
a. $500 to grow to $1,039.50 if invested at 5 percent compounded annually
500/1039.5 =.481
Lookup .48 under 5% in pv of $1 table = 15 years
b. $35 to grow to $53.87 if invested at 9 percent compounded annually
35/53.87 =.649
Lookup .649 under 9% in pv of $1 table = 5 years
c. $100 to grow to $298.60 if invested at 20 percent compounded annually
100/298.6 =.3348
Lookup .3348 under 20% in pv of $1 table = 6 years
d. $53 to grow to $78.76 if invested at 2 percent compounded annually
53/78.76 =.6729
Lookup .6729 under 2% in pv of $1 table = 20 years
(Present value) what is the present value of the following future amounts?
a. $800 to be received 10 years from now discounted back to the present at 10 percent
800/(1.10)^10 = 308.43
b. $300 to be received 5 years from now discounted back to the present at 5 percent
300/(1.05)^5 = 235.06
c. $1,000 to be received 8 years from now discounted back to the present at 3 percent
1000/(1.03)^8 = 789.41
d. $1,000 to be received 8 years from now discounted back to the present at 20 percent
1000/(1.2)^8 = 232.56
(Present value of an annuity) what is the present value of the following annuities?
a. $2,500 a year for 10 years discounted back to the present at 7 percent
2500 x {1-(1/1.07)10}/.07 = 2500 x 7.02 =17550
b. $70 a year for 3 years discounted back to the present at