Question
Present Value and Future Value The following situations require the application of the time value of money: Use the appropriate present or future value table:
Present Value and Future Value
The following situations require the application of the time value of money:
Use the appropriate present or future value table:
FV of $1, PV of $1, FV of Annuity of $1 and PV of Annuity of $1
1. On January 1, 2017, $16,000 is deposited. Assuming an 8% interest rate, calculate the amount accumulated on January 1, 2022, if interest is compounded (a) annually, (b) semiannually, and (c) quarterly. Round your answers to the nearest dollar.
| Future Value | ||
| a. Annual compounding | $fill in the blank 1 | |
| b. Semiannual compounding | $fill in the blank 2 | |
| c. Quarterly compounding | $fill in the blank 3 |
2. Assume that a deposit made on January 1, 2017, earns 8% interest. The deposit plus interest accumulated to $20,000 on January 1, 2022. How much was invested on January 1, 2017, if interest was compounded (a) annually, (b) semiannually, and (c) quarterly? Round your answers to the nearest dollar.
| Present Value | ||
| a. Annual compounding | $fill in the blank 4 | |
| b. Semiannual compounding | $fill in the blank 5 | |
| c. Quarterly compounding | $fill in the blank 6 |
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