Compute the future values of the following first assuming that payments are made
ID: 2705636 • Letter: C
Question
Compute the future values of the following first assuming that payments are made on the last day of the period and then assuming payments are made on the first day of the period:
Payment Years Interest Rate
$123 13 13%
$4555 8 8%
$74484 10 10
$167332 9 1
What is the Future Value for each payment made on the first day of period?
What is the Future Value for each payment made on the last day of period?
Explanation / Answer
Payment Years Interest Rate
$123 13 13%
FV = $123(FVIFA 13%/1, 13(1)) = $3,688.12
FV = $123(FVIFA 13%/1, 13(1))(1 + .13/1) = $4,167.57
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Payment Years Interest Rate
$4555 8 8%
FV = $4,555(FVIFA 8%/1, 8(1)) = $48,449.84
FV = $4,555(FVIFA 8%/1, 8(1))(1 + .08/1) = $52,325.83
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Payment Years Interest Rate
$74484 10 10
FV = $74,484(FVIFA 10%/1, 5(1)) = $454,732.27
FV = $74,484(FVIFA 10%/1, 5(1))(1 + .10/1) = $500,205.50
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Payment Years Interest Rate
$167332 9 1
FV = $167,332(FVIFA 1%/1, 9(1)) = $1,567,654.40
FV = $167,332(FVIFA 1%/1, 9(1))(1 + .01/1) = $1,583,330.95
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