Expert: Sherman D. - 8/6/2009

Question
1.Calculate the present value of an investment if its future value is $10,000 and it is invested for 6years at 6%, compounded quarterly.
2. Find the future Value of an annuity due if $2,000 is deposited at the beginning of each year for 3years at 6%.
3. Phil Weisberg is depositing $20,000 into a 5year bank CD that will compound annually at 7%. Calculate how much he will have at the end of the fifth year.
4. calculate the present value of a lump sum of $84,278 that had a 2-year term, had a 9 1/2% interest rate, and was compounded semiannually.
5. Calculate the cost to Norm Martin to set up an ordinary annuity for his son Allen. It will pay Allen $10,000 per year for 20years and has an interest rate of 5%
6.The interest on a bank CD has been compounded semiannually for 3years, the CD has a balance of $18,173.21. its rate was 6.5%. Calculate the original deposit amount.
7.Anton Breese wants to have money accumulated in 3 years to buy a new car. he will make $5,000 payments into an account at the end of each of the next 3 years. It will earn interest at an 8 1/2% rate, compounded semiannually. How much will Aton have at that time?

Answer
you can use the formula I = P(1 + (r/n))^(n * t) then just use inverse of operations.

1.)
10000 = P(1 + (.06/4))^(6 * 4)
P = about $6995.44

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2.)
I = 2000(1 + .06)^3
I = $2382.03

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3.)
I = 20000(1 + .07)^5
I = $28051.03

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4.)
84278 = P(1 + (.095/2))^4
P = $70000

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5.)
I = 10000(1 + .05)^20
I = $26532.98

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6.)
18173.21 = P(1 + (.065/2))^6
P = $15000

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7.)
I = 5000(1 + (.085/2))^6
I = $5434.03

from here on out, i will only do these if you REALLY need help doing them, but you will need to show the work so i can help you understand where you went wrong.