Question

In this part, you need to examine the relation between the future value and the number of periods.  

1. For a present value of $1,000, create a table that shows the FV at 0%, 5%, and 10% for 0, 2, 4, 6, 8, and 10 years. (6 Points)

2. In a single graph, plot the table above with years on the horizontal axis and FV on the vertical axis for each interest rate and be sure to label the y-axis, x-axis, chart title, and legend. (6 Points)

Answer 1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

A B C D E F G H I Present value $1,000.00 Year/Interest rate 2 0% $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 $1,000.00 Future value 5% $1,000.00 $1,102.50 $1,215.51 $1,340.10 $1,477.46 $1,628.89 10% $1,000.00 $1,210.00 $1,464.10 $1,771.56 $2,143.59 $2,593.74 12 14 Future value vs No. of years $3,000.00 16 $2,500.00 $2,000.00 Future value $1,500.00 $1,000.00 $500.00 $0.00 4 8 10 6 Years — 0% — 5% — 10%

Cell reference -

2 А в DE G H Present value 1000 Future value Year/Interest rate O 0.05 0.1 =$C$2*(1+$C$5)^B6 =$C$2*(1+$D$5)^B6 1=$C$2*(1+$E$5)^B6 =$C$2*(1+$C$5^B7 =$C$2*(1+$D$5)^B7 =$C$2*(1+$E$5)^B7 =$C$2*(1+$C$5)^B8 =$C$2*(1+$D$5)^B8 1=$C$2*(1+$E$5)^B8 =$C$2*(1+$C$5)^B9 =$C$2*(1+$D$5)^B9 =$C$2*(1+$E$5)^B9 =$C$2*(1+$C$5)^B10 =$C$2*(1+$D$5)^B10 =$C$2*(1+$E$5)^B10 =$C$2*(1+$C$5^B11 |=$C$2*(1+$D$5)^B11 |=$C$2*(1+$E$5)^B11 000 Future value vs No. of years $3,000.00 $2,500.00 $2,000.00 Future value $1,500.00 $1,000.00 $500.00 $0.00 10 12 Years 29 30 — 0% — 5% — 10% 33

Hope this will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.