Personal Finance 1st Edition by Jack R. Kapoor

Exercise 25

Computing the Time Value of Money. Using time value of money tables, calculate the following.

a. The future value of $450 six years from now at 7 percent.

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b. The future value of $900 saved each year for 10 years at 8 percent.

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c. The amount a person would have to deposit today (present value) at a 6 percent interest rate to have $1,000 five years from now.

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d. The amount a person would have to deposit today to be able to take out $600 a year for 10 years from an account earning 8 percent.

Step 1 of 10

a) Compute the future value:

Future value is the compounding value of the present value of cash flows.

The formula for computing the future value is