Question

The following are a number of values taken from compound interest tables involving the same number of periods and the same rate of interest. Indicate what each of these four values represents.

(a)		6.49236
(b)		3.49845
(c)		0.28584
(d)		22.71319

Answer 1

(a)	6.49236	this represents the present value of ordinary annuity of $1 at 11% discount rate per 12 years.
(b)	3.49845	this represents the future value of $1 at 11% compound interest due in 12 years.
(c)	0.28584	this represents the present value of $1 at 11% discount rate in 12 years.
(d)	22.7132	this represents the future value of ordinary annuity of $1 at 11% rate per 12 years.

Answer 2

The given values represent different calculations related to compound interest over a specific number of periods and at a certain interest rate. Let's break down what each value represents:

(a) 6.49236: This value likely represents the future value (or compound amount) of an initial principal amount after a certain number of periods at a given interest rate. The future value includes both the principal and the interest earned on it.

(b) 3.49845: This value likely represents the present value (or principal amount) required to achieve a desired future value after a specific number of periods at a given interest rate. In other words, it is the amount of money needed to be invested now to reach the desired future value through compound interest.

(c) 0.28584: This value likely represents the interest rate per period, expressed as a decimal. It indicates the rate at which the initial principal amount grows over time due to compound interest.

(d) 22.71319: This value likely represents the total interest earned (or interest amount) on an initial principal amount after a specific number of periods at a given interest rate. It is the sum of all the interest payments earned during the investment period.

Please note that without further context or additional information, these interpretations are general assumptions based on common compound interest calculations. The specific context and formulas used for these calculations may vary depending on the application and the financial scenario being considered.

Answer 3

(a) 6.49236: This value represents the Future Value (FV) of an investment or loan after a certain number of periods at a given rate of interest when compounded annually.

(b) 3.49845: This value represents the Present Value (PV) of a future sum of money to be received or paid after a certain number of periods at a given rate of interest when compounded annually.

(c) 0.28584: This value represents the Interest Factor (IF) or the factor by which the initial investment or principal is multiplied to calculate the compound interest earned or charged after a certain number of periods at a given rate of interest when compounded annually.

(d) 22.71319: This value represents the Future Value of an ordinary annuity or a series of equal periodic payments (e.g., monthly or annually) made at the end of each period for a certain number of periods at a given rate of interest when compounded annually.