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Fin 100 Module Problem 1 to 5 - Future Value of Investment

  • Date Submitted: 07/05/2016 05:55 AM
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FIN 100 Module Problem 1 to 5   - Future Value of Investment

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Problem 1 - Future Value of Investment If a firm has $250,000 to invest and can earn 8.5%, compounded annually, how much will the firm have after two years?

Rate

Nper

PMT

PV

Type

FV

Problem 2 - Future Value of Retirement Account
A self-employed person deposits $1,250 annually in a retirement account that earns 5.5%.
What will be the account balance at age 62 if the savings program starts when the individual is age 50?
Rate
Nper
PMT
PV
Type
FV
How much additional money will be in the account if the saver defers retirement until age 66 and continues the annual contributions until then?
Hint: First calculate the FV of the account at age 66 and then subtract the FV determined above (at age 62) to arrive at the additional money saved.
Rate
Nper
PMT
PV
Type
FV
Additional money saved if the contributions continue until age 66
The first part is a repeat of 1a.
How much additional money will be in the account if the saver discontinues the contributions at age 62, but lets it build up until retirement at age 66?
Hint: First calculate the FV of the account at age 62, then utilize the FV of the account at age 62 as the PV in the FV calculation for the next 4 years.
Finally, subtract the FV of the account at age 62 from the FV of the account with no additional contributions to arrive at the additional money saved.
Rate
Nper
PMT
PV
Type
FV
Rate
Nper
PMT
PV
Type
FV
Additional money saved if contributions stop at age 62, but the money keeps growing until age 66.

Problem 3 - Present Value of Savings Account
A father has decided to set aside a one time lump sum for college that will amount to $60,000 by the time
his 5 year old is 18 years old (13 years). Using 8% as the rate and assuming no further investments will be made,
how much must the father invest...

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