TVM Concepts

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1. Suppose you deposit $2,500 in the bank at 4.5% interest for 5 years. How much will you have in your account at the end of five years. Are you finding PV or FV or something else here? Equation Calculator Approach 2. What is discounting? Give an example of where discounting is used. 3. Mike Smith, an entrepreneur, wants to have $120,000 in an investment account ten years from now to pay for his daughter's college education. He recently sold a business and can afford to fund the account now. How much should he deposit if 7% is the relevant after-tax return expected on the account? Show an equation for solving the problem. Also show the calculator approach