If you invest $1000 for 1 year at a 5% interest rate, you will have $1050 at the end of year one.  Write down the equation that gives you this answer.

 

 

If you invest $1000 for 2 years at a 5% interest rate, you will have $1102.50 at the end of year two.  Intuitively, why is the answer not $1100?  

Write down the equation that gives you this answer.

 

 

 

How much will you have at the end of 5 years if you invest $1000 at an interest rate of 5%? 

 

 

How much will you have at the end of 10 years if you invest $1000 at an interest rate of 5%?

 

 

How much will you have at the end of 15 years if you invest $1000 at an interest rate of 5%?

 

 

Thought question (this should not require any calculations if you have the previous answers):  With an interest rate of 5%, how much would you have to invest at t = 5 years in order to end up at t = 15 years with the same amount of money as in the last question?

 

 

 

If you invest $500 at 8% per year for 25 years, how much will you have at the end of 25 years?

 

 

If you invest $500 at 8% per year for 25 years, and you only earn simple interest, how much will you have at the end of 25 years?

 

 

Solving for PV, discount rate, and number of periods

How much do you need to invest today so that you will have $150,000 in 17-years time?  Assume an interest rate of 8% per year.

 

 

 

How much was invested 10 years ago, if it has earned 7% per year and the current value is $19,671.51?

 

 

 

Does increasing the number of periods make the difference between PV and FV bigger or smaller?

 

 

Does increasing the interest rate make the difference between PV and FV bigger or smaller?

 

 

What interest rate are you earning per year if a $500 investment today grows to $600 over 5 years?

 

 

What interest rate are you earning if you can double your money is 6 years?

 

 

How many years does it take for $15,000 to grow to $20,000 at an interest rate of 10%?