Assume you make the following investments: a. b. C. You invest a lump sum of $8,750 for five years at 12% interest. What is the investment's value at the end of five years? In a different account earning 12% interest, you invest $1,750 at the end of each year for five years. What is the investment's value at the end of five years? What general rule of thumb explains the difference in the investments' future values? (Click the icon to view the future value factor table.) Click the icon to view the present value factor table.) (Click the icon to view the future value annuity factor table.) (Click the icon to view the present value annuity factor table.) a. You invest a lump sum of $8,750 for five years at 12% interest. What is the investment's value at the end of five years? (Round your answer to the nearest whole dollar.) Investment's value = b. In a different account earning 12% interest, you invest $1,750 at the end of each year for five years. What is the investment's value at the end of five years? (Round your answer to the nearest whole dollar.) Investment's value c. What general rule of thumb explains the difference in the investments' future values? The future value of the annuity is than the future value of the lump sum investment. The the cash is invested, the installments were received over the course of five years. The earned interest over the full five years. However, the Vinterest is earned. The investor lets time do the work. earned interest only as the Enter any number in the edit fields and then continue to the next question. Future Value of $1 years at 12 Periods 1% 2% 3% 4% 5% Period 1 1.010 1.020 1.030 Period 2 1.020 1.040 1.061 1.082 10% 1.100 1.210 Period 3 1.030 1.061 1.093 1.125 st, you inve Period 4 1.041 1.082 1.126 1.170 Period 5 1.051 1.104 1.159 1.217 6% 8% 14% 16% 1.040 1.050 1.060 1.080 1.120 1.140 1.160 1.180 1.200 1.103 1.124 1.166 1.254 1.300 1.346 1.392 1.440 1.158 1.191 1.260 1.331 1.405 1.482 1.561 1.643 1.216 1.262 1.360 1.464 1.574 1.689 1.811 1.939 1.276 1.338 1.469 1.611 1.762 1.925 2.100 2.288 12% 18% 20% 1.728 2.074 to the nearest whole dollar.) 2.488 Period 6 1.062 1.126 1.194 1.265 1.340 difference i han the fut Period 7 Period 8 1.083 Period 9 1.094 Period 10 1.105 1.072 1.149 1.230 1.316 of five year Period 11 1.116 Period 12 1.127 Period 13 1.138 Period 14 1.149 Period 15 1.161 Period 20 1.220 1.486 Period 25 1.282 Period 40 Period 30 1.348 1.489 1.419 1.587 1.772 1.974 2.195 2.436 2.700 1.407 1.504 1.714 1.949 2.211 2.502 2.826 3.185 3.583 1.172 1.267 1.369 1.477 1.594 1.851 2.144 2.476 2.853 3.278 3.759 1.195 1.305 1.423 1.551 1.689 1.999 2.358 2.773 3.252 3.803 4.435 5.160 1.219 1.344 1.480 1.629 1.791 2.159 2.594 3.106 3.707 4.411 5.234 6.192 1.243 1.384 1.539 1.710 1.898 2.332 2.853 3.479 4.226 5.117 6.176 7.430 1.268 1.426 1.601 1.796 2.012 2.518 3.138 3.896 4.818 5.936 7.288 8.916 1.294 1.469 1.665 1.886 2.133 2.720 3.452 4.363 5.492 6.886 8.599 10.699 1.319 1.513 1.732 1.980 2.261 2.937 3.797 4.887 6.261 7.988 10.147 12.839 1.346 1.558 1.801 2.079 2.397 3.172 4.177 5.474 7.138 9.266 11.974 15.407 1.806 2.191 2.653 3.207 4.661 6.727 9.646 13.743 19.461 27.393 38.338 1.641 2,094 2.666 3.386 4.292 6.848 10.835 17.000 26.462 40.874 62.669 95.396 1.811 2.427 3.243 4.322 5.743 10.063 17.449 29.960 50.950 85.850 143.371 237.376 2.208 3.262 4.801 7.040 10.286 21.725 45.259 93.051 188.884 378.721 750.378 1,469.772 2.986 4.300 earned in sent value factor table.) Present Value of $1 0 for five years at 12% in Periods 7% 2% 2% interest, you invest $1 Period 6 Period 7 ains the difference in the Period & 0.923 Period 9 0.914 0.837 than the future v Period 10 0.905 0.820 e course of five years. Th Period 11 0.896 Period 12 0.887 Period 13 0.879 Period 14 0.870 0.804 0.722 0.788 0.701 0.773 0.758 0.650 0.625 0.585 0.557 0.661 Period 15 0.861 Period 20 0.820 Period 25 0.780 Period 30 0.742 Period 40 0.672 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% Period 1 0.990 0.980 0.971 0.962 0.952 0.943 0.926 0.909 0.893 0.877 0.862 0.847 0.833 Period 2 0.980 0.961 0.943 0.925 0.907 0.890 0.857 0.826 0.797 0.769 0.743 0.718 0.694 Period 3 0.971 0.942 0.915 0.889 0.864 0.840 0.794 0.751 0.712 0.675 0.641 0.609 0.579 Period 4 0.961 0.924 0.888 0.855 0.823 0.792 0.735 0.683 0.636 0.592 0.552 0.516 0.482 Period 5 0.951 0.906 0.863 0.822 0.784 0.747 0.681 0.621 0.567 0.519 0.476 0.437 0.402 0.942 0.888 0.837 0.790 0.746 0.705 0.630 0.564 0.507 0.456 0.410 0.370 0.335 0.933 0.871 0.813 0.760 0.711 0.665 0.583 0.513 0.452 0.400 0.354 0.314 0.279 0.853 0.789 0.731 0.677 0.627 0.540 0.404 0.351 0.305 0.266 0.233 0.766 0.703 0.645 0.592 0.500 0.424 0.361 0.308 0.263 0.225 0.194 0.744 0.676 0.614 0.558 0.463 0.386 0.322 0.270 0.227 0.191 0.162 0.527 0.429 0.350 0.287 0.237 0.195 0.162 0.135 0.497 0.397 0.319 0.257 0.208 0.168 0.137 0.112 0.681 0.601 0.530 0.469 0.368 0.290 0.229 0.182 0.145 0.116 0.093 0.577 0.505 0.442 0.340 0.263 0.205 0.160 0.125 0.099 0.078 0.743 0.642 0.555 0.481 0.417 0.315 0.239 0.183 0.140 0.108 0.084 0.065 0.673 0.554 0.456 0.377 0.312 0.215 0.149 0.104 0.073 0.051 0.037 0.026 0.610 0.478 0.375 0.295 0.233 0.146 0.092 0.059 0.038 0.024 0.016 0.010 0.552 0.412 0.308 0.231 0.174 0.099 0.057 0.033 0.020 0.012 0.007 0.004 0.453 0.307 0.208 0.142 0.097 0.046 0.022 0.011 0.005 0.003 0.001 0.001 swer to the nearest whole dollar) 0.467 earned interes ars at 12 Future Value of Annuity of $1 Periods 1% 2% 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 20% you inve Period 1 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 1.000 Period 2 2.010 2.020 2.030 2.040 2.050 2.060 e nearest whole dollar.) 2.080 2.100 2.120 2.140 2.160 2.180 2.200 Period 3 3.030 3.060 3.091 3.122 3.153 3.184 3.246 3.310 3.374 3.440 3.506 3.572 3.640 Period 4 4.060 4.122 4.184 4.246 4.310 4.375 4.506 4.641 4.779 4.921 5.066 5.215 5.368 rence i Period 5 5.101 5.204 5.309 5.416 5.526 5.637 5.867 6.105 6.353 6.610 6.877 7.154 7.442 Period 6 6.152 6.308 6.468 6.633 the fut Period 7 7.214 Period 8 8.286 7.434 8.583 7.662 we year Period 9 Period 10 6.802 6.975 7.336 7.716 8.115 8.536 7.898 8.142 8.394 8.923 9.487 10.089 10.730 8.892 9.214 9.549 9.897 10.637 11.436 12.300 9.369 9.755 10.159 10.583 11.027 11.491 12.488 13.579 14.776 10.462 10.950 11.464 12.006 12.578 17.549 8.977 9.442 9.930 11.414 12.142 12.916 earned interest on 13.233 14.240 15.327 16.499 13.181 14.487 15.937 16.085 19.337 21.321 17.519 19.086 20.799 23.521 25.959 Period 11 Period 12 Period 13 Period 14 Period 15 11.567 12.169 12.808 13.486 23.045 25.733 28.755 32.150 12.683 13.412 14.192 15.026 27.271 30.850 34.931 39.581 13.809 14.680 15.618 16.627 32.089 36.786 42.219 48.497 14.947 15.974 17.086 18.292 19.599 37.581 43.672 50.818 59.196 16.097 17.293 18.599 20.024 21.579 43.842 51.660 60.965 72.035 Period 20 22.019 24.297 26.870 29.778 33.066 36.786 45.762 57.275 72.052 91.025 115.380 146.628 186.688 Period 25 28.243 32.030 36.459 41.646 47.727 54.865 73.106 98.347 133.334 181.871 249.214 342.603 471.981 Period 30 34.785 40.568 47.575 56.085 66.439 79.058 113.283 164.494 241.333 356.787 530.312 790.948 1,181.882 Period 40 48.886 60.402 75.401 95.026 120.800 154.762 259.057 442.593 767.091 1,342.025 2,360.757 4,163.213 7,343.858 14.207 14.972 16.645 18.531 20.655 15.917 16.870 18.977 21.384 24.133 17.713 18.882 21.495 24.523 28.029 21.015 24.215 27.975 32.393 23.276 27.152 31.772 37.280 ctor table.) Present Value of Annuity of $1 actor table.) Periods Period 1 Period 2 1% 2% 0.990 1.970 Period 3 2.941 ars at 12% interes 3.902 3.808 3.717 4.713 4.580 you invest $1,750 erence in the inve the future value 3% 4% 5% 6% 8% 10% 12% 14% 16% 18% 0.980 0.971 0.962 0.952 0.943 0.926 0.909 0.893 0.877 0.862 0.847 1.942 1.913 1.886 1.859 1.833 1.783 1.736 1.690 1.647 1.605 1.566 2.884 2.829 2.775 2.723 2.673 2.577 2.487 2.402 2.322 2.246 2.174 2.106 Period 4 3.630 3.546 3.465 3.312 3.170 3.037 2.914 2.798 2.690 2.589 Period 5 4.853 4.452 4.329 4.212 3.993 3.791 3.605 3.433 3.274 3.127 2.991 Period 6 5.795 5.601 5.417 5.242 5.076 4.917 4.623 4.355 4.111 3.889 3.685 3.498 3.326 Period 7 6.728 6.472 6.230 6.002 5.786 5.582 5.206 4.868 4.564 4.288 4.039 3.812 3.605 Period 8 7.652 7.325 7.020 6.733 6.463 6.210 5.747 5.335 4.968 4.639 4.344 4.078 3.837 Period 9 8.566 8.162 7.786 7.435 7.108 6.802 6.247 5.759 5.328 4.946 4.607 4.303 4.031 Period 10 9.471 8.983 8.530 8.111 7.722 7.360 6.710 6.145 5.650 5.216 4.833 4.494 4.192 Period 11 10.368 9.787 9.253 8.760 Period 12 11.255 10.575 9.954 9.385 Period 13 12.134 11.348 10.635 9.986 20% 0.833 1.528 r to the nearest whole dollar.) ve years. The 8.306 7.887 7.139 6.495 5.938 5.453 5.029 4.656 4.327 8.863 8.384 7.536 6.814 6.194 5.660 5.197 4.793 4.439 9.394 8.853 7.904 7.103 6.424 5.842 5.342 4.910 4.533 Period 14 13.004 12.106 11.296 10.563 9.899 9.295 8.244 7.367 6.628 6.002 5.468 5.008 4.611 Period 15 13.865 12.849 11.938 11.118 10.380 9.712 8.559 7.606 6.811 6.142 5.575 5.092 earned interest 4.675 Period 20 18.046 16.351 14.877 13.590 12.462 11.470 9.818 8.514 7.469 Period 25 22.023 19.523 17.413 15.622 14.094 12.783 10.675 9.077 7.843 Period 30 25.808 22.396 19.600 17.292 15.372 13.765 11.258 9.427 8.055 Period 40 32.835 27.355 23.115 19.793 17.159 15.046 11.925 9.779 8.244 6.623 5.929 5.353 4.870 6.873 6.097 5.467 4.948 7.003 6.177 5.517 4.979 7.105 6.233 5.548 4.997 Print Done