Reference no: EM133001687
Use the formulas to calculate the PV or FV Future Value of Single AmountFV Future ValuePV Present Value
i Interest rate (in decimal form)
n Number of time periods (must be consistent with interest rate)
Future Value Formula: FV = PV (1+i)^n
Present Value Formula: PV = FV 1/(1+r)^n
1 - Know how to calculate the Future Value of a Lump Sum. What is the Future Value of $1000 earning 8% after six years?
2 - Know how to calculate the Future Value of an Annuity.
a. What is the Future Value of an annual deposit of $2400 earning 8% after 40 years?
b. What is the Future Value of an annual deposit of $2400 earning 8% after 20 years?
c. Comparing those two calculations, why is it important for someone to start saving for retirement when they are young?
3 - Know how to calculate the Present Value of a Lump Sum. What is the Present Value of $1000 earning 8% for six years?
4 - Know how to use Present Value to Determine Loan Payments. If you borrow $1000 with a 6% interest rate to be repaid in three equal payments at the end of the next three years, what will the annual loan payment be?
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