Business Finance Exam 1 (Chapters 1-4) Test Questions And 100% Accurate Answers.
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Course
Business finance
Institution
Business Finance
Problem 4-3 One Year Future Value (LG4-2)
What is the future value of $650 deposited for one year earning an 10 percent interest rate annually? - Answer FVN = PV × (1 + i)N
FV1 = $650 × (1 + 0.10)1
= $650 × 1.10
= $715
Or N = 1, I = 10, PV = −650, PMT = 0, CPT FV == 715
...
Business Finance Exam 1 (Chapters 1-4)
Test Questions And 100% Accurate
Answers.
Problem 4-3 One Year Future Value (LG4-2)
What is the future value of $650 deposited for one year earning an 10 percent interest rate annually? -
Answer FVN = PV × (1 + i)N
FV1 = $650 × (1 + 0.10)1
= $650 × 1.10
= $715
Or N = 1, I = 10, PV = −650, PMT = 0, CPT FV == 715
Problem 4-5 Multiyear Future Value (LG4-3)
How much would be in your savings account in eight years after depositing $240 today if the bank pays 8
percent per year? - Answer FVN = PV × (1 + i)N
FV8 = $240 × (1 + 0.08)8
= $240 × 1.85093
= $444.22
Or N = 8, I = 8, PV = −240, PMT = 0, CPT FV == 444.223
Problem 4-6 Multiyear Future Value (LG4-3)
, Compute the value in 34 years of a $1,000 deposit earning 10 percent per year. - Answer FVN = PV × (1
+ i)N
FV34 = $1,000 × (1 + 0.10)34
= $1,000 × 25.54767
= $25,547.67
Or N = 34, I = 10, PV = −1,000, PMT = 0, CPT FV == 25,547.67
Problem 4-7 Compounding with Different Interest Rates (LG4-3)
A deposit of $430 earns the following interest rates:
10 percent in the first year.
8 percent in the second year.
7 percent in the third year.
What would be the third year future value? - Answer FV = PV × (1 + i) (1 + j) (1 + k)
FV = $430 × (1 + 0.10) (1 + 0.08) (1 + 0.07)
= $430 × 1.10 × 1.08 × 1.07
= $546.60
Problem 4-8 Compounding with Different Interest Rates (LG4-3)
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