Future Value. Fill in the future values for the following table using one of the three methods below: a. Use the future value formula, FV = PV *( 1 + r) n. b. Use the TVM keys from a calculor. c. Use the TVM function in a spreadsheet.
P3 – 4 Future Value. Grand opening Bank is offering a one-time investment opportunity for its new customer. A customer opening a new checking account can buy a special saving bond for $ 400 today, Which the bank will compound at 8.5 % for the next ten years. The savings bond must be held for at least five years, but can then be cashed in at end of any year starting with years five. What is the value of the bond at each cashin date up through year ten? What is the value of the savings bond at the end of year five? a. What is the value of the savings bond at the end of year five? b. What is the value of the savings bond at the end of year six? c. What is the value of the savings bond at the end of year seven? d. What is the value of the savings bond at the end of year eight? e. What is the value of the savings bond at the end of year nine? f. What is the value of the savings bond at the end of year ten?
P 3 – 8 |
a. |
Use the present value formula, PV = FV *--- |
b. |
Use the TVM keys from a calculator. |
c. |
Use the TVM function in a spreadsheet. |
P3-15 Future Value. YOU are a new employee with the metro daily planet. The planet offers three different retirement plans. Plans 1 starts the first day of work and puts $ 1,100 away in your retirement acc at the end of every year for 40 years. Plan 2 starts after 10 year and puts away $ 2,100 every year for year. Plan 3 starts after 20 year and puts away $ 4,100 every year for the last 20 year 0 employment. All tree plans guarantee an annual growth rate of 11 %. a. Which plan should you choose if you plan to work at the Planet for 40 years? b. Which plan should you choose if you plan to work at the Planet for only the next 30 years? c. Which plan should you choose if you plan to work at the Planet for only the next 20 years? d. Which plan should you choose if you plan to work at the Planet for only the next 10 years? e. What do the answers in parts( a) through( d) imply about savings?