Need Help with Finance

 

 

P2.Find the future value of $10,000 invested now after five years if the annual rate is 8 percent.

 

a.       What would be the future value if the interest rate is a simple interest rate

b.      What would be the future value if the interest rate is a compound interest rate?

 

 P3. Determine the future values if $5,000 is invested in each of the following situations:

 

a.       5 percent for ten years

b.      7 percent for seven years

c.       9 percent for four years

 

P4.You are planning to invest $2,500 today for three years at a nominal interest rate of 9 percent with annual compounding.

 

a.       What would be the future value of your investment?  

b.     Now assume that inflation is expected to be 3 percent per year over the same three year period.  What would be the investment’s future value in terms of purchasing power?   

c.       What would be the investment’s future value in terms of purchasing power if inflation occurs at a 9 percent annual rate?