Problems You invest $3,000 a year for 3 years at 12 percent a. What is the value of your investment after one year? Multiply $3,000x 1.12 b. What is the value of your investment after two years? multiply your answer to part a by 1.12 c. What is the value of your investment after three years? Multiply your answer to part b by 1. 12. This gives you your final answer d. Confirm that your final answer is correct by going to Appendix A(future value ofa $1), and looking up the future value for n=3, and i=12 percent Multiply this tabular value by $3,000 and compare your answer to the answer in part c. There may be a slight difference due to round ing Solution: a.$3.000x1.12 $3.360.00 b.$3,360x1.12=$3.763.20 C.$3,763.20x1.12=$4,214.78 d.$3,000X1.405=$4,21500( Appendix a) 9-2 What is the present value of a. $9,000 in 7 years at 8 percent? b. $20,000 in 5 years at 10 percent? c. $10,000 in 25 years at 6 percent? d. $1,000 in 50 years at 16 percent? Solution: appendix b PⅤ=FⅤⅹPv a.$9,000x583=$5,247 b.$20000X.621=$12420 C.$10,000×233=$2,30 d.$1000x.001=$1 -307 oyrightC2005 by The McGraw-Hill Companies, IncCopyright © 2005 by The McGraw-Hill Companies, Inc. S-307 Problems 9-1. You invest $3,000 a year for 3 years at 12 percent. a. What is the value of your investment after one year? Multiply $3,000 x 1.12. b. What is the value of your investment after two years? Multiply your answer to part a by 1.12. c. What is the value of your investment after three years? Multiply your answer to part b by 1.12. This gives you your final answer. d. Confirm that your final answer is correct by going to Appendix A (future value of a $1), and looking up the future value for n = 3, and i = 12 percent. Multiply this tabular value by $3,000 and compare your answer to the answer in part c. There may be a slight difference due to rounding. Solution: a. $3,000 x 1.12 = $3,360.00 b. $3,360 x 1.12 = $3,763.20 c. $3,763.20 x 1.12 = $4,214.78 d. $3,000 x 1.405 = $4,215.00 (Appendix A) 9-2. What is the present value of: a. $9,000 in 7 years at 8 percent? b. $20,000 in 5 years at 10 percent? c. $10,000 in 25 years at 6 percent? d. $1,000 in 50 years at 16 percent? Solution: Appendix B PV = FV x PVIF a. $ 9,000 x .583 = $5,247 b. $20,000 x .621 = $12,420 c. $10,000 x .233 = $2,330 d. $ 1,000 x .001 = $1