Several of the PV or FV problems also deal with interest rates that are NOT annual interest rates. In these cases care should be taken to make sure that you use the appropriate periodic rate and adjust the number of years to the number of periods. If I compound quarterly then you should use a quarterly interest rate and if it is for two years the number of periods is 2 X 4 = 8.

a) Ellen now has $125. How much would she have after 8 years if she leaves it invested at 8.5% with annual compounding? a. $205.83 b. $216.67 c. $228.07 d. $240.08 e. $252.08 b) Last year Rocco Corporation's sales were $225 million. If sales grow at 6% per year, how large (in millions) will they be 5 years later? a. $271.74 b. $286.05 c. $301.10 d. $316.16 e. $331.96

c) How much would $20,000 due in 50 years be worth today if the discount rate were 7.5%? a. $438.03 b. $461.08 c. $485.35 d. $510.89 e. $537.78 d) What is the PV of an ordinary annuity with 10 payments of $2,700 if the appropriate interest rate is 5.5%? a. $16,576 b. $17,449 c. $18,367 d. $19,334 e. $20,352