Using Future Value Tables V2=$1,000(FVF7%,) =$1,000(1.145) $1, 145 [Due to Rounding Period% 0 8 1.0601.0701.080 11241.1451.166 2345 1.1911.2251.260 12621.3111.360 338 4031.469 3-16
3-16 FV2 = $1,000 (FVIF7%,2 ) = $1,000 (1.145) = $1,145 [Due to Rounding] Using Future Value Tables Period 6% 7% 8% 1 1.060 1.070 1.080 2 1.124 1.145 1.166 3 1.191 1.225 1.260 4 1.262 1.311 1.360 5 1.338 1.403 1.469
Story Problem Example Julie Miller wants to know how large her $10,000 deposit will become at a compound interest rate of 10%o for 5 years 0 45 10%⊥ $10,000 FV 5 3-17
3-17 Julie Miller wants to know how large her $10,000 deposit will become at a compound interest rate of 10% for 5 years. Story Problem Example 0 1 2 3 4 5 $10,000 FV5 10%
Story Problem Solution Calculation based on general formula FV EP 0(7+)n FV5=$10,000(1+0.10)5 =$16,10510 Calculation based on table FV5=$10,000(FVF10% =$10,000(1.611) $16, 110 [Due to Rounding 3-18
3-18 Calculation based on Table I: FV5 = $10,000 (FVIF10%, 5 ) = $10,000 (1.611) = $16,110 [Due to Rounding] Story Problem Solution Calculation based on general formula: FVn = P0 (1+i) n FV5 = $10,000 (1+ 0.10) 5 = $16,105.10
Double Your Money!!! Quick! How long does it take to double $5,000 at a compound rate of 12% per year(approx We will use the rule-of-72 3-19
3-19 We will use the Rule-of-72. Double Your Money!!! Quick! How long does it take to double $5,000 at a compound rate of 12% per year (approx.)?