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Problems The following are exercises in future (terminal) values: a. At the end of three years, how much is an initial deposi
c. At the end of six years, how much is an initial $500 deposit followed by five year-end, annual $100 payments worth, assumi
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a)Following is the calculation of FV in each of the given scenarios

Particulars r=100% r=10% r=0%
PV $                  100.00 $                  100.00 $                  100.00
n 3 3 3
frequency 1 1 1
FV FV = PV (1+r) FV = 100 X (1+1) FV = 800 FV = PV X (1+r) FV = 100 X (1+0.1) FV = 133.10 FV = PV X (1+r) FV = 100 X (1+0)3 FV = 100

b)Following is the calculation of FV in each of the given scenarios

Particulars r=10% r=5% r=0%
PV 500 500 500
PMT 100 100 100
n 5 5 5
frequency 1 1 1
FV (1+r) - 1 FV = PV X (1+r) + PMTX FV = 500 x (1 +0.1)5 + 100 x (1 + 0.1)5 - 1 0.1 FV = 800 + 610.51 FV =1,415.77 FV = PV X (1+r) + PMTX (1+r) - 1 FV = 500 m (1 +0.05)5 + 100 (1 +0.05)5 – 1 0.1 FV =1,190.70 (1+r) - 1 FV = PV X (1+r) + PMTX FV = 500 x (1 +0.0)5 + 100 x (1 +0.0)5 – 1 0.1 FV = 1000

c) Following is the calculation of FV in each of the given scenarios

Particulars r=10% r=5% r=0%
PV 500 500 500
PMT 100 100 100
n 6 6 6
frequency 1 1 1
FV (1+r) - 1 FV = PV X (1+r) + PMTX FV = 500 x (1 + 0.1)6 + 100 x (1 +0.1)6 – 1 0.1 FV =1,657.34 FV = PV X (1+r) + PMTX (1+r) - 1 FV = 500 x (1 +0.05)6 + 100 (1 +0.05)6 - 1 0.1 FV =1,350.24 (1+r) - 1 FV = PV X (1+r) + PMTX FV = 500 x (1 +0.0)6 + 100 x (1 +0.0)6 – 1 0.1 FV =1100

d) Below is the FV in the given scenarios:

Particulars r=100% r=10%
PV $                  100.00 $                  100.00
n 3 3
frequency 4 4
FV FV = PV x (1 + -frequencyxn frequency FV = 100 x (1 + +)4x3 FV = 1455.19 FV = PV X (1+ -) frequencyxn frequency 0.1 FV = 100 X (1+ )4x3 FV = 134.50FV = PV X (1+r) FV = 100 X (1+0.1) FV = 133.10
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