Compound interest factors are provided below:
?
?
5%, n = 10
5%, n = 20
10%, n = 10
10%, n = 20
Future value of a single sum
1.629
2.653
2.594
6.728
Future value of an ordinary annuity
12.578
33.067
15.937
57.275
Present value of a single sum
0.614
0.377
0.386
0.149
Present value of an ordinary annuity
7.722
12.462
6.145
8.514
Present value of an annuity due
8.108
13.085
6.759
9.365
Using the above factors, answer each of the following questions.
a.How much will you have in 10 years if you invest $30,000 in an investment that earns 10% semiannually?b.How much do you have to invest today to have $30,000 in 10 years if the investment earns 10% annually?c.How much will you have in 10 years if you invest $15,000 at the end of each year in an investment earning 10% annually?d.How much do you have to invest today and every six months thereafter for the next 10 years if you want to accumulate a total of $400,000 10 years from today in an investment paying 10% semiannually?
What will be an ideal response?
| a. | Future value, 5%, 20 periods: $30,000´2.653 = $79,590 |
| ? | ? |
| b. | Present value, 10%, 10 periods: $30,000´0.386 = $11,580 |
| ? | ? |
| c. | Future value ordinary annuity, 10%, 10 periods: $15,000´15.937 = $239,055 |
| ? | ? |
| d. | Present value ordinary annuity, 5%, 20 periods: $400,000 ÷ 13.085 = $30,569 |
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