Answer:
1. FV = $9,082.69
2. FV = $16,939.71
3. FV = $502,561.90
4. FV = $251,664.60
Explanation:
Req. 1
Future value is the expected amount of money that will be gained by an individual because of saving the money today.
We know,
Future value, FV = PV × [tex](1 + i)^{n}[/tex]
Here, PV = Present Value = $2,450
i = Yearly interest rate = 14% = 0.14
n = number of period (here, years) = 10
Putting the values,
FV = $2,450 × [tex](1 + 0.14)^{10}[/tex]
or, FV = $2,450 × [tex]1.14^{10}[/tex]
or, FV = $2,450 × 3.707221314
Therefore, FV = $9,082.69
Req. 2
Again, Future value, FV = PV × [tex](1 + i)^{n}[/tex]
Here, PV = $9,152
i = Yearly interest rate = 8% = 0.08
n = number of period (here, years) = 8
Putting the values,
FV = $9,152 × [tex](1 + 0.08)^{8}[/tex]
or, FV = $9,152 × [tex]1.08^{8}[/tex]
or, FV = $9,152 × 1.85093021
Therefore, FV = $16,939.71
Hence, today's $9,152 amount will receive $16,939.71 if we invest it for 8 years with an annual compounding interest rate of 8%.
Req. 3
Again, Future value, FV = PV × [tex](1 + i)^{n}[/tex]
Here, PV = $80,355
i = Yearly interest rate = 13% = 0.13
n = number of period (here, years) = 15
Putting the values,
FV = $80,355 × [tex](1 + 0.13)^{15}[/tex]
or, FV = $80,355 × [tex]1.13^{15}[/tex]
or, FV = $80,355 × 6.254270378
Therefore, FV = $502,561.90
Hence, today's $80,355 amount will receive $502,561.90 if we invest it for 15 years with an annual compounding interest rate of 13%.
Req. 4
Again, Future value, FV = PV × [tex](1 + i)^{n}[/tex]
Here, PV = $187,796
i = Yearly interest rate = 5% = 0.05
n = number of period (here, years) = 6
Putting the values,
FV = $187,796 × [tex](1 + 0.05)^{6}[/tex]
or, FV = $187,796 × [tex](1.05)^{6}[/tex]
or, FV = $187,796 × 1.340095641
Therefore, FV = $251,664.60
We will receive $251,664.60 in the future if we invest $187,796 today with a compounding interest rate of 5% for the next 6 years.
