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value: 20
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value:
20.00 pointsExercise 6-2 Future value; single amounts [LO6-2]
Determine the future value of $10,000 under each of the following sets of assumptions (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.):
Annual Rate Period Invested Interest Compounded i = n = Present Value Future Value 1. 10% 10 years Semiannually $10,000 2. 12% 5 years Quarterly $10,000 3. 24% 30 months Monthly $10,000
Expert Solution
Determination of Future value (FV):
FV = Present value (PV) × (1+i)n
Where "i" is Interest rate, "n" is no of periods.
| Annual rate | Period invested | Interest compounded | "i" | "n" | PV | FV | |
| 1 | 10% | 10 years | Semi annually |
10%(1/2) = 5% |
10 years × 2 = 20 periods |
$ 10,000 |
$10,000×(1+0.05)20 = $ 10,000 × 2.6533 = $ 26,533 ???? |
| 2 | 12% | 5 years | Quarterly |
12% (1/4) = 3% |
5 years × 4 = 20 periods |
$ 10,000 |
$10,000×(1+0.03)20 = $ 10,000×1.8061 = $ 18,061 |
| 3 | 24% | 30 months | Monthly |
24%(1/12) = 2% |
30 periods | $ 10,000 |
$10,000×(1+0.02)30 = $ 10,000×1.8114 = $ 18,114 |
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