6. You decide to deposit your high school graduation money gift of $1,000 into a savings account. (LO 4-3)

a. What formula would you use to compute its worth when you graduate from college in four years?

(1) PV (1 + i)n

(2) FV (1 − i)n

(3) FV (1 + n)i

(4) FV (1 − n)i

b. If you decided to use the reference table method and wanted to know the value of your deposit in four years, what factor would you use if your deposit was earning a 3% interest rate annually?

(1) 0.889

(2) 1.126

(3) 4.184

(4) 3.717

c. Using a calculator, which values would you use to solve for FV?

(1) N = 4; I/YR = 3; PV = 1000; PMT = 0

(2) N = 4; I/YR = 3; PV = 0; PMT = 10000

(3) N = 4; I/YR = 3; PV = −1000; PMT = 0

(4) N = 4; I/YR = 3; PV = 0; PMT = −1000

d. What would be the value of the gift money upon graduation from college, assuming you graduate in four years?

(1) $1,418.36 (3) $1,371.71

(2) $1,888.50 (4) $1,125.51