Future Value Present Value Annual Interest Rate Number of compounding periods per year Years Period Rate

Total Number of Periods FV = PV*(1+i/n)^((x*n) FV(rate,nper,pmt,[pv],[type])

Variables Mgirvin uses FV PV i n x i/n x*n

Variables Excel uses FV PV

Numbers and Formulas ? 10000 0.06 12 10

Variables textbook uses FV or C PV or C

rate nper or npery

r t

Total Interest

Future Value Present Value Annual Interest Rate Number of compounding periods per year Years Period Rate Total Number of Periods FV = PV*(1+i/n)^((x*n) FV(rate,nper,pmt,[pv],[type])

Variables Mgirvin uses FV PV i n x i/n x*n

Variables Excel Numbers and uses Formulas FV ? PV 10000 0.06 12 10 0.005 120 $18,193.97 $18,193.97 $8,193.97

Variables textbook uses FV or C PV or C

rate nper or npery

r t

Total Interest

PV = Investment = i = Annual Interest Rate = n = Compounding Periods per Year = x = years = Simple Interest = Year Year 0 Year 1 Year 2 Year 3 Year 4 FV = Future Value of Investment @ Simple Interest =

$100.00 0.1 1 4

Interest Earned

Amount in Bank

PV = Investment = i = Annual Interest Rate = n = Compounding Periods per Year = x = years = Simple Interest = Year Year 0 Year 1 Year 2 Year 3 Year 4 FV = Future Value of Investment @ Simple Interest =

$100.00 0.1 1 4 $10.00 Interest Earned $10.00 $10.00 $10.00 $10.00 $140.00 Amount in Bank $100.00 $110.00 $120.00 $130.00 $140.00

PV = Investment = i = Annual Interest Rate = n = Compounding Periods per Year = x = years = Year Year 0 Year 1 Year 2 Year 3 Year 4 FV = Future Value of Investment @ Compound Interest = FV = Future Value of Investment @ Compound Interest = FV = Future Value of Investment @ Simple Interest = FV = Future Value of Investment @ Compound Interest = Interest on Interest =

$100.00 0.1 1 4 Interest Earned Amount in Bank

PV = Investment = i = Annual Interest Rate = n = Compounding Periods per Year = x = years = Year Year 0 Year 1 Year 2 Year 3 Year 4 FV = Future Value of Investment @ Compound Interest = FV = Future Value of Investment @ Compound Interest = FV = Future Value of Investment @ Simple Interest = FV = Future Value of Investment @ Compound Interest = Interest on Interest =

$100.00 0.1 1 4 Interest Earned $10.00 $11.00 $12.10 $13.31 $146.41 $146.41 $140.00 $146.41 $6.41 Amount in Bank $100.00 $110.00 $121.00 $133.10 $146.41

PV = Investment = i = Annual Interest Rate = n = Compounding Periods per Year = x = years =

$100.00 0.1 1 4

$300.00 Amount in Bank each Ye $250.00 $200.00 $150.00 $100.00 $50.00 $0.00

Amount in Bank each Ye

Future Value

Time 0 1 2 3 4 5 6 7 8 9 10

Amount in Bank each Year with Simple Amount in Bank each Year Interest with Compound Interest Difference $100.00 $100.00 $0.00 $110.00 $110.00 $0.00 $120.00 $121.00 $1.00 $130.00 $133.10 $3.10 $140.00 $146.41 $6.41 $150.00 $161.05 $11.05 $160.00 $177.16 $17.16 $170.00 $194.87 $24.87 $180.00 $214.36 $34.36 $190.00 $235.79 $45.79 $200.00 $259.37 $59.37

$700.00 $600.00 $500.00 $400.00 $300.00 $200.00 $100.00 $0.00

$300.00 Amount in Bank each Year with Compound Interest $250.00 $200.00 $150.00 $100.00 $50.00 $0.00 0 1 2 3 4 5 6 7 8 9 10 $700.00 $600.00 $500.00 $400.00 $300.00 $200.00 $100.00 $0.00 0 1 2 3 4 5 6 7 8 9 10 Time Amount in Bank each Year with Simple Interest

0.00% Annual Rate 2.50% Annual Rate 5.00% Annual Rate 7.50% Annual Rate 10.00% Annual Rate 12.50% Annual Rate 15.00% Annual Rate 17.50% Annual Rate 20.00% Annual Rate

If we invest $100,000.00 with an annual rate of 7.00% compounded 12 times a year for 10 years, what is the future value of the investment? Present Value = PV $ 100,000.00 Annual Interest Rate = i 7.00% Number of Compoundin Periods per Year = n 12 Years = x 10 Future Value = FV Period Rate = i/n Total Periods = n*x (1 + i/n)^(n*x) Future Value = FV Future Value = FV Future Value = FV Total Interest earned = cash put in - cash taken out Write it in words:

If we invest $100,000.00 with an annual rate of 7.00% compounded 12 times a year for 10 years, what is the future value of the investment? Present Value = PV $ 100,000.00 Annual Interest Rate = i 7.00% Number of Compoundin Periods per Year = n 12 Years = x 10 Future Value = FV Period Rate = i/n 0.005833333 Total Periods = n*x 120 (1 + i/n)^(n*x) 2.0096613766956 Future Value = FV $ 200,966.14 Future Value = FV $ 200,966.14 Future Value = FV $200,966.14 Total Interest earned = cash put in - cash taken out $100,966.14 If we invest $100,000.00 with an annual rate of 7.00% compou times a year for 10 years, our future value of the investment $200,966.14. Of that amount, $100,966.14 is the interest earn investment. Write it in words:

If we invest $15,000.00 with an annual rate of 5.50% compounded 365 times a year for 10 years, what is the future value of the investment? Present Value = PV $ 15,000.00 Annual Interest Rate = i 5.50% Number of Compoundin Periods per Year = n 365 Years = x 10 Future Value = FV Period Rate = i/n Total Periods = n*x Future Value = FV Future Value = FV Total Interest earned = cash put in - cash taken out Write it in words:

If we invest $15,000.00 with an annual rate of 5.50% compounded 365 times a year for 10 years, what is the future value of the investment? Present Value = PV $ 15,000.00 Annual Interest Rate = i 5.50% Number of Compoundin Periods per Year = n 365 Years = x 10 Future Value = FV Period Rate = i/n 0.000150685 Total Periods = n*x 3650 Future Value = FV $ 25,997.72 Future Value = FV $25,997.72 Total Interest earned = cash put in - cash taken out $10,997.72 If we invest $15,000.00 with an annual rate of 5.50% compoun times a year for 10 years, our future value of the investment $25,997.72. Of that amount, $10,997.72 is the interest earned investment. Write it in words:

How much would we have to invest today, if we want to have $1,000,000.00 in 40 years and we could earn an annual interest rate (discount rate) of 10.00% compounded 12 times a year? Present Value = PV "Annual Interest Rate" = Discount Rate (term used when doing PV calculations) = i 10.00% Number of Compoundin Periods per Year = n 12 Years = x 40 Future Value = FV $ 1,000,000.00 Period Payment = PMT Period Rate = i/n Total Periods = n*x (1 + i/n)^(n*x) Present Value = PV Present Value = PV Present Value = PV Total Interest earned = cash put in - cash taken out Write it in words:

How much would we have to invest today, if we want to have $1,000,000.00 in 40 years and we could earn an annual interest rate (discount rate) of 10.00% compounded 12 times a year? Present Value = PV "Annual Interest Rate" = Discount Rate (term used when doing PV calculations) = i 10.00% Number of Compoundin Periods per Year = n 12 Years = x 40 Future Value = FV $ 1,000,000.00 Period Payment = PMT Period Rate = i/n 0.008333333 Total Periods = n*x 480 (1 + i/n)^(n*x) 53.7006631743289 Present Value = PV $ 18,621.74 Present Value = PV $ 18,621.74 Present Value = PV -$18,621.74 Total Interest earned = cash put in - cash taken out $ 981,378.26 We would have to invest $18,621.74 today, if we want t $1,000,000.00 in 40 years and we could earn an annual int (discount rate) of 10.00% compounded 12 times a y Write it in words:

 = (1 + )^( ) (1 + )^( ) = (1 + )^( ) (1 + )^( ) (1 + )^( ) = (1 + )^( ) (1 + )^( ) = (1 + )^( )

have to 621.74 want to

How much would we have to invest today, if we want to have $150,000.00 (for our daughter's college tuition) in 18 years and we could earn an annual interest rate (discount rate) of 6.95% compounded 365 times a year? Present Value = PV "Annual Interest Rate" = Discount Rate (term used when doing PV calculations) = i 6.95% Number of Compoundin Periods per Year = n 365 Years = x 18 Future Value = FV $ 150,000.00 Period Payment = PMT Period Rate = i/n Total Periods = n*x (1 + i/n)^(n*x) Present Value = PV Present Value = PV Present Value = PV Total Interest earned = cash put in - cash taken out Write it in words:

How much would we have to invest today, if we want to have $150,000.00 (for our daughter's college tuition) in 18 years and we could earn an annual interest rate (discount rate) of 4.00% compounded 365 times a year? Present Value = PV "Annual Interest Rate" = Discount Rate (term used when doing PV calculations) = i 4.00% Number of Compoundin Periods per Year = n 365 Years = x 18 Future Value = FV $ 150,000.00 Period Payment = PMT Period Rate = i/n 0.000109589041095890 Total Periods = n*x 6570 (1 + i/n)^(n*x) 2.0543521665502 Present Value = PV $ 73,015.72 Present Value = PV $ 73,015.72 Present Value = PV ($73,015.72) Total Interest earned = cash put in - cash taken out $ 76,984.28

Write it in words:

We would have to invest $73,015.72 today, if we want to (for our daughter's college tuition) in 18 years and we co interest rate (discount rate) of 4.00% compounded 36

ve to 15.72 ant to 00 (for

If you want to buy a $350,000.00 C & C Router Machine to improve manufacturing efficiency and you have $200,000.00 today that you can invest at an annual rate of 8.50% compounded 12 times a year, how long do you have to wait (be careful about what period you need to make the calculation and what period you need for the answer) until you can afford the machine? (Assume the $350,000.00 is the price in the future). PV $ 200,000.00 i 8.50% n 12 FV $ 350,000.00 x*n months x/n years Write it in words: 35 = 20*(1.0071)^(12*x) 35/20 = (1.0071)^(12*x) LN(35/20) = LN((1.0071)^(12*n)) LN(35/20) = 12*n*LN(1.0071) LN(35/20)/LN(1.0071) = 12*n LN(35/20)/LN(1.0071)/12 = n 6.6 = n = years FV/PV (1+i/n) LN(FV/PV) LN((1+i/n)) LN(FV/PV)/LN((1+i/n)) 79.2840605560736/n = x =

6.591550252 1.75 1.007083333333330 0.559615788 0.007058364 79.28406056 months 6.607005046 years

If you want to buy a $350,000.00 C & C Router Machine to improve manufacturing efficiency and you have $200,000.00 today that you can invest at an annual rate of 8.50% compounded 12 times a year, how long do you have to wait (be careful about what period you need to make the calculation and what period you need for the answer) until you can afford the machine? (Assume the $350,000.00 is the price in the future). PV $ 200,000.00 i 8.50% n 12 FV $ 350,000.00 x*n 79.28406056 months x/n 6.607005046 years If you have $200,000.00 to invest today at 8.50% compounded 12 a year and you need $350,000.00 to buy the machine, you would have to wait 6.607 years

Write it in words: 35 = 20*(1.0071)^(12*x) 35/20 = (1.0071)^(12*x) LN(35/20) = LN((1.0071)^(12*n)) LN(35/20) = 12*n*LN(1.0071) LN(35/20)/LN(1.0071) = 12*n LN(35/20)/LN(1.0071)/12 = n 6.6 = n = years FV/PV (1+i/n) LN(FV/PV) LN((1+i/n)) LN(FV/PV)/LN((1+i/n)) 79.2840605560736/n = x =

6.591550252 1.75 1.007083333333330 0.559615788 0.007058364 79.28406056 months 6.607005046 years

The Higher The Discount Rate, The Lower The Present Value
$120.00

$100.00

$80.00

0.00% Annual Rate 2.50% Annual Rate

Present Value

5.00% Annual Rate $60.00 7.50% Annual Rate 10.00% Annual Rate 12.50% Annual Rate $40.00 15.00% Annual Rate 17.50% Annual Rate 20.00% Annual Rate $20.00

$0.00 0 1 2 3 4 5 Time 6 7 8 9 10

If you want to buy a $350,000.00 C & C Router Machine to improve manufacturing efficiency and you can invest $250,000.00 today for the next 5 years (compounding 2 times a year), what annual interest rate (APR) do you need to find (be careful about periods) so that you can afford the machine? (Assume the $350,000.00 is the price in the future). PV $ 250,000.00 n 2 x 5 FV $ 350,000.00 i/n i Write it in words: FV/PV FV/PV^(1/(n*x)) FV/PV^(1/(n*x))-1 0.0342196941293802*2 1.4 1.034219694 0.034219694 Half year rate 0.068439388 Annual Rate

If you want to buy a $350,000.00 C & C Router Machine to improve manufacturing efficiency and you can invest $250,000.00 today for the next 5 years (compounding 2 times a year), what annual interest rate (APR) do you need to find (be careful about periods) so that you can afford the machine? (Assume the $350,000.00 is the price in the future). PV $ 250,000.00 n 2 x 5 FV $ 350,000.00 i/n 3.42% i 6.84% If you want to buy a $350,000.00 C & C Router Machine to improve manufacturing efficiency and you can invest $250,000.00 today for the next 5 years (compounding 2 times a year), the annual interest rate (APR) you need to find is 6.84%. Write it in words: FV/PV FV/PV^(1/(n*x)) FV/PV^(1/(n*x))-1 0.0342196941293802*2 1.4 1.034219694 0.034219694 Half year rate 0.068439388 Annual Rate

Rule of 72 givens an estimate of what rate you need to double Money. PV $1,000.00 FV $2,000.00 n 12 x 5 n*x Rule of 72: i/n aprox = 72/(n*x) i = (72/(n*x)*n) = estimate of rate needed to double $ Using RATE: i check FV check

Notice that this is the number 1.2 not 0.012. To get an estimate of Rule of 72), you would have to divide the result by Notice that this is the number 14.4 not 0.144. To get an estimate of Rule of 72), you would have to divide the result by

Remember, this is an estimate.

not 0.012. To get an estimate of the real rate would have to divide the result by 100. not 0.144. To get an estimate of the real rate would have to divide the result by 100.

Rule of 72 givens an estimate of what rate you need to double Money. PV $1,000.00 FV $2,000.00 n 12 x 5 n*x 60 Rule of 72: i/n aprox = 72/(n*x) i = (72/(n*x)*n) = estimate of rate needed to double $ Using RATE: i check FV check

Notice that this is the number 1.2 not 0.012. To get an estimate of the re Rule of 72), you would have to divide the result by 100 1.200 Notice that this is the number 14.4 not 0.144. To get an estimate of the r Rule of 72), you would have to divide the result by 100 14.40 0.144 13.94% $2,045.65 Remember, this is an estimate.

o get an estimate of the real rate to divide the result by 100. To get an estimate of the real rate to divide the result by 100.

What is the Annual Interest Rate? Time Given as: 36 months # of Compounding Periods per Year n 2 Present Value PV 72,500.00 Future Value FV 100,000.00 Years x Total periods n*x Annual Interest Rate i Period Interest Rate i/n Check:

What is the Annual Interest Rate? Time Given as: 36 months # of Compounding Periods per Year n 2 Present Value PV 72,500.00 Future Value FV 100,000.00 Years x 3 Total periods n*x 6 Annual Interest Rate i 11.012% Period Interest Rate i/n 5.506% Check: $100,000.00

If we invest $250,000.00 with an annual rate of 5.50% compounded 2 times a year for 15 years, what is the future value of the investment? Present Value = PV -$250,000.00 Annual Interest Rate = i 5.50% Number of Compoundin Periods per Year = n 2 Years = x 15 Future Value = FV Period Rate = i/n Total Periods = n*x Future Value = FV

If we borrow $250,000.00 with an annual rate of 5.50% compounded 2 times a year for 15 years, what is the future value of the amount we owe? Present Value = PV $ 250,000.00 Annual Interest Rate = i 5.50% Number of Compoundin Periods per Year = n 2 Years = x 15 Future Value = FV Period Rate = i/n Total Periods = n*x Future Value = FV

Check: $564,150.43

Check: ($564,150.43)

If we invest $250,000.00 with an annual rate of 5.50% compounded 2 times a year for 15 years, what is the future value of the investment? Present Value = PV -$250,000.00 Annual Interest Rate = i 5.50% Number of Compoundin Periods per Year = n 2 Years = x 15 Future Value = FV Period Rate = i/n 0.0275 Total Periods = n*x 30 Future Value = FV $564,150.43

If we borrow $250,000.00 with an annual rate of 5.50% compounded 2 times a year for 15 years, what is the future value of the amount we owe? Present Value = PV $ 250,000.00 Annual Interest Rate = i 5.50% Number of Compoundin Periods per Year = n 2 Years = x 15 Future Value = FV Period Rate = i/n 0.0275 Total Periods = n*x 30 Future Value = FV -$564,150.43

Check: $564,150.43

Check: ($564,150.43)

4.1 PV = i= n= x= FV = FV = 1000 8.00% 1 4

4.2 Age = Future Age = Age Difference = x = FV = i= n= x= PV = PV =

19 25 $ 100,000.00 11.00% 1

4.3 PV = n= x= FV = i= i= Check with Rule of 72

1.00 1 12 2.00

4.4 PV = i= n= FV = x= x= $ 10,000.00 7.00% 1 20,000.00

4.4 PV = i= n= FV = n*x = x= $ 10,000.00 7.00% 1 30,000.00

4.1 PV = i= n= x= FV = FV = 1000 8.00% 1 4 $ 1,360.49 $1,360.49

4.2 Age = Future Age = Age Difference = x = FV = i= n= x= PV = PV =

19 25 6 $ 100,000.00 11.00% 1 6 53464.08361 ($53,464.08)

4.3 PV = n= x= FV = i= i= Check with Rule of 72

1.00 1 12 2.00 5.95% 5.95% 6

FV = PV*(1+i/n)^(n*x) 2 = 1*(1+i)^12 2 = (1+i)^12 2^(1/12)-1 = i

4.4 PV = i= n= FV = x= x= $ 10,000.00 7.00% 1 20,000.00 10.24476835 10.24476835 4.4 PV = i= n= FV = n*x = x= $ 10,000.00 7.00% 1 30,000.00 16.23757367 16.23757367

FV = PV*(1+i/n)^(n*x) 2 = 1.07^x LN2/LN1.07 = x FV = PV*(1+i/n)^(n*x) 3 = 1.07^x LN3/LN1.07 = x

4.1

4.2

4.3

4.1

4.2 4.3

Compounding is a means to get rich, as long as you have prudent saving habits. The definition of Compounding is: "The process of accumulating interest in an investment over time to earn more interest." Discounting is like "interest backwards". If you know a future value amount and you want to know what it is worth today, given an appropriate discount rate (same as interest rate), you make a Present Value calculation (PV = FV/((1+i/n)^(n*x))). The Present Value calculation is the Future Value calculation, but backwards. With the Future Value calculation you add all the interest to the Present Value amount to get the Future Value amount; time is going forward. However, with the Present Value calculation you take out (remove) all the interest from the Future Value amount to get the Present Value amount; time is going Backwards. The definition of Discounting is: "Using the appropriate discount rate, you discount back the future value amount to get the Present Value amount" or "what is the current value of future cash flows given an appropriate discount rate". As you increase the length of time involved in a future value calculation (assuming a positive rate of return), the future value increases or the present value decreases. The time variable, or "input", is the most important variable in the Future Value and Present Value calculations because it has the most effect on the resultant number as compared to the other input variables.

As you increase the Period Interest Rate, i/n, the Future Value amount increases; whereas, the Present Value will decrease.

1st City i PV x FV 0.07 8000 10

2nd City i n PV x FV FV

0.08 1 8000 10

1st City FV 2nd City FV Extra Interest Due To Compounding

1st City i PV x FV 0.07 8000 10 $13,600.00

2nd City i n PV x FV FV

0.08 1 8000 10 $17,271.40 $17,271.40

1st City FV 2nd City FV Extra Interest Due To Compounding

$13,600.00 $17,271.40 $3,671.40

textbook answer looks incorrect.

No. 1 2 3 4

PV $ $ $ $

Years 3,150.00 8,453.00 89,305.00 227,382.00 6 19 13 29

Annual Interest # Compound Rate Periods 18.00% 6.00% 11.00% 5.00%

FV 1 1 1 1

FV

No. 1 2 3 4

PV $ $ $ $

Years 3,150.00 8,453.00 89,305.00 227,382.00 6 19 13 29

Annual Interest # Compound Rate Periods 18.00% 6.00% 11.00% 5.00%

1 1 1 1

FV $ $ $ $

8,503.60 25,575.39 346,796.33 935,935.14

FV $8,503.60 $25,575.39 $346,796.33 $935,935.14

No. PV 1 2 3 4

PV

Years 12 4 16 21

Annual Interest Rate 4.00% 9.00% 12.00% 11.00%

# Compound Periods 1 1 1 1

FV $ $ $ $

17,328.00 41,517.00 790,382.00 647,816.00

No. PV 1 2 3 4

($10,823.02) ($29,411.69) ($128,928.43) ($72,388.42)

PV $ $ $ $

Years 10,823.02 29,411.69 128,928.43 72,388.42 12 4 16 21

Annual Interest Rate 4.00% 9.00% 12.00% 11.00%

# Compound Periods 1 1 1 1

FV $ $ $ $

17,328.00 41,517.00 790,382.00 647,816.00

No. 1 2 3 4

PV $ $ $ $

Years 715.00 905.00 15,000.00 70,300.00 6 7 18 21

Annual Interest Rate

Annual Interest Rate

# Compound Periods 1 1 1 1

FV $ $ $ $

1,381.00 1,718.00 141,832.00 312,815.00

No. 1 2 3 4

PV $ $ $ $

Years 715.00 905.00 15,000.00 70,300.00 6 7 18 21

Annual Interest Annual Interest # Compound Rate Rate Periods 11.60% 11.60% 9.59% 9.59% 13.29% 13.29% 7.37% 7.37% FV = PV*(1+i/n)^(n*x) 715 = 1381*(1+i/n)^(6) (715/1381)^(1/6)-1

1 1 1 1

FV $ $ $ $

1,381.00 1,718.00 141,832.00 312,815.00

No. 1 2 3 4

PV $ $ $ $

Years 250.00 1,941.00 32,805.00 32,500.00

Years

Annual Interest # Compound Rate Periods 9.00% 7.00% 12.00% 19.00%

1 1 1 1

FV $ $ $ $

1,105.00 3,700.00 387,120.00 198,212.00

No. 1 2 3 4

PV $ $ $ $

250.00 1,941.00 32,805.00 32,500.00

Annual Interest # Compound Years Years Rate Periods 17.24506178 17.24506178 9.00% 9.535063588 9.535063588 7.00% 21.77872066 21.77872066 12.00% 10.39415177 10.39415177 19.00%

1 1 1 1

FV $ $ $ $

1,105.00 3,700.00 387,120.00 198,212.00

Total Cost Education = FV = x= PV = n= i/n = i= Words:

320000 18 50000 1

Total Cost Education = FV = x= PV = n= i/n = i= Words:

320000 18 50000 1 10.8633% 10.8633% 0.108632935 0.108632935 To allow our current investment of $50,000.00 to cover the our child's eduction costs in 18 years, we would have to earn an annual return of 10.86%. FV = PV*(1+i/n)^(n*x) (FV/PV)^(1/(n*x))-1

Annual Rate = i = n= PV1 = FV1 = x*n = x= Annual Rate = i = n= PV2 = FV2 = x*n = x= Words: Words:

0.07 1 1 2

FV = PV*(1+i/n)^(n*x) LN(FV/PV)/LN(1+i/n) = n*x check FV check

0.07 1 1 4 check FV check

LN(1+i/n) = n*x

Annual Rate = i = n= PV1 = Annual Rate = i = n= PV1 = FV1 = x*n = x= Annual Rate = i = n= PV2 = FV2 = x*n = x=

0.07 1 1 0.07 1 1 2 10.24477 10.24477 0.07 1 1 4 20.48954 20.48954

FV = PV*(1+i/n)^(n*x) LN(FV/PV)/LN(1+i/n) = n*x check FV check 10.24477 $2.00

check FV check 20.48954 $4.00

Words: Words:

To double my investment at an Annual Rate of 7.00% I would ha to invest for 10.24years. To quadruple my investment at an Annual Rate of 7.00% I wou have to invest for 20.49years.

LN(1+i/n) = n*x

nnual Rate est for an Annual nvest for

Year 2 Year 1 Year Difference = x = PV = FV = n= i/n = i=

1893 2009 $1.00 $6,450.00 1

check

Year 2 Year 1 Year Difference = x = PV = FV = n= i/n = i=

1893 2009 116 $1.00 $6,450.00 1 7.855186% 0.07855186

check 0.078552

Unfunded Pension Liability = FV = Must be paid in = years = x = Discount Rate = i = n= n*x = i/n = Present Value of Liabilitiy (Lump Sum Value today that stock Analysts can subtract from current firm market value worth) = PV = Words:

$ 750,000,000.00 25 0.08 1 25 0.08

check

Unfunded Pension Liability = FV = Must be paid in = years = x = Discount Rate = i = n= n*x = i/n = Present Value of Liabilitiy (Lump Sum Value today that stock Analysts can subtract from current firm market value worth) = PV =

$ 750,000,000.00 25 0.08 1 25 0.08

($109,513,428.68)

Words:

The financial analyst would like to know what the f today so it can help them to calculate what the fi worth today. The Present Value of the future Unfun $109,513,428.68.

check

109,513,428.68

st would like to know bility is worth today so o calculate what the e is worth today. The

FV = Lottery value in future = x= n= Discount Rate = PV = Words:

2,000,000.00 80 1 0.09

Check

FV = Lottery value in future = x= n= Discount Rate = PV = Words;

2,000,000.00 80 1 0.09 ($2,027.26) The present value of this future lottery payout is $2,027.26.

Check 2027.263

Part 1 PV = i= n= x= FV = Words:

$5,000.00 0.105 1 45

Part 2 PV = i= n= x= FV =

$5,000.00 0.105 1 35

Check

Check

Part 1 PV = i= n= x= FV =

$5,000.00 0.105 1 45 $446,963.97

Part 2 PV = i= n= x= FV =

$5,000.00 0.105 1 35 $164,683.37

Words:

The investment Strategy that this suggests is that the most important variable in investment strategy is the Total Number of Periods. For 10 extra years, we get $282,280.60 extra dollars of return. Check 446963.9694 Check 164683.366

PV = x= i= n= FV = Words:

13000 6 0.09 1

Time Line 0

2 $13,000.00

Check:

8 $21,802.30

years

PV = x= i= n= FV =

13000 6 0.09 1 $21,802.30

Time Line 0

2 $13,000.00

Words:

If we receive $21,802.30 in 2 years, and then we wait 6 years, our FV will be $21,802.30 (Remember: 8 - 2 = 6).

Check: 21802.3014

8 $21,802.30

years

PV = FV = Months = Years = x = n= n*x = i/n = i= Words:

1 4 24 4 (3 month rate) , then 3 + 3 + 3 + 3 = 12 months <<== Three Month Rate <<== Annual Rate Check: Check:

PV = FV = Months = Years = x = n= n*x = i/n = i=

1 4 24 2 4 (3 month rate) , then 3 + 3 + 3 + 3 = 12 months, so 4 total period in a year 8 18.921% <<== Three Month Rate Check: Check: 75.683% <<== Annual Rate 0.189207 4 First, if the problems gives us time in months, we have to determine the years. After we do that the problem is straight forward. The 3-month rate to quadruple your investment would be 18.92%

Words:

period in a year

i/n = n= i= PV = FV = n*x = x= Words:

0.35% 12 $1,800.00 $3,500.00 months years

Check:

i/n = n= i= PV = FV = n*x = x=

0.35% 12 0.042 $1,800.00 $3,500.00 190.3255241 months 15.86046034 years

Check: 190.3255

Words:

It would take 15.86 years for the investment to grow to $3,500.00 given a monthly Rate of 0.35%.

FV = n= i/n = i= x= n*x PV = Words:

$75,000.00 12 0.42% 10

FV = n= i/n = i= x= n*x PV =

$75,000.00 12 0.42% 5.040% 10 120 ($45,356.05)

Words:

The Present Value of $75,000.00 given a monthly rate of 0.42% is $45,356.05.

1st FV = x= i= n= PV = Words: Check: 1,000,000.00 45 11.00% 1 FV = x= i= n= PV =

2nd 1,000,000.00 45 5.00% 1

Check:

1st FV = x= i= n= PV = 1,000,000.00 45 11.00% 1 -9,129.90 FV = x= i= n= PV =

2nd 1,000,000.00 45 5.00% 1 -111,296.51

Words:

I want to be a millionaire when I retire, so with either option, I am going to invest earlier in life instead of later.