
Suppose you invest $1000 for one year at 5% per year. What is the future value in one year?
$1050

Suppose you invest $1000 for two years at 5% per year. How much will you have two years from now?
$1102.50

What is the future value of $1000 invested for two years at 5% simple interest? Compound interest? What accounts for the difference?
 $1100
 $1102.50
 The extra $2.50 comes from the interest of .05($50) = $2.50 earned on the first interest payment.

Suppose you invest $1000 for 5 years at 5% per year. How much will you have five years from now?
$1276.28

What is the future value of $1000 invested for 5 years at 5% simple interest? Compound interest?

Suppose you had a relative deposit $10 at 5.5% interest 200 years ago. How much would the investment be worth today?
$447 189.84

What is the future value of $10 invested for 200 years at 5.5% simple interest? Compound interest? How much would compounding add to the value of the investment?
 $210.55
 $447 189.84
 Added $446 979.29

Suppose your company expects to increase unit sales of widgets by 15% per year for the next 5 years. If you currently sell 3 million widgets in one year, how many widgets do you expect to sell in 5 years?
6 034 072 units

Definition of "discounting"
Finding the present value of some future amount.

Usual meaning of "value"
Present value unless future value is specifically indicated.

Suppose you need $10,000 in one year for the down payment on a new car. If you can earn 7% annually, how much do you need to invest today?
$9345.79

You want to begin saving for your daughter's college education and you estimate that whe will need $150,000 in 17 years. If you feel confident that you can earn 8% per year, how much do you need to invest today?
$40 540.34

Your parents set up a trust fund for you 10 years ago that is now worth $19,671.51. If the fund earned 7% per year, how much did your parents invest?
$10,000

What is the present value of $500 to be received in 5 years? 10 years? The discount rate is 10%.

What is the present value of $500 received in 5 years if the interest rate is 10%? 15%?

You are looking at an investment that will pay $1200 in 5 years if you invest $1000 today. What is the implied rate of interest?
3.714%

Suppose you are offered an investment that will allow you to double your money in 6 years. You have $10,000 to invest. What is the implied rate of interest?
12.25%

Suppose you have a 1year old son and you want to provide $75,000 in 17 years towards his college education. You currently have $5000 to invest. What interest rate must you earn to have the $75,000 when you need it?
17.27%

You want to purchase a new car and you are willling to pay $20,000. If you can invest at 10% per year and you currently have $15,000, how long will it be before you have enough money to pay cash for the car?
3.02 years

Suppose you want to buy a new house. You currently have $15,000 and you figure you need to have a 10% down payment. If the type of house you want costs about $200,000 and you can earn 7.5% per year, how long will it be before you have enough money for the down payment?
3.98 years

You need $50,000 in 10 years. If you can earn 6% interest, how much do you need to invest today?
$27,920

