Answer all questions and SHOW ALL WORK:

Show working and steps used to calculate future values. Q1. Suppose an investor deposits $3,000 today in an interest bearing account at a local bank. The account pays 4.5% interest compounded annually and the investor expects to withdraw the original principal, plus the accumulated interest, at the end of five years. What is the future value (FV) of this investment at the end of five years (use financial calculator)? Solution: FV=? Q2. You have agreed to purchase a real estate today for $25,000. You expect to hold the property for 6 years and then sell it. You expect the property to increase in value 12% per year, compounded annually. For how much should you be able to sell the property in 6 years? FV=? Q3. Assume $1500 is invested for 12 years. The annual interest rate is 8%, but the interest rate will be compounded quarterly. What is N ? What is the periodic (quarterly) interest rate? What will be the accumulated FV in 12 years? Thus, FV=