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1. (a) If you deposit $200 in the bank today, what is its future value at the end of three years if it is invested in an acco
(b) What is the present value of $200 to be received in three years if the appropriate interest rate is 12% (annual compoundi
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Answer #1

1)(a) The amount deposited into the bank today is $200.

PV = ($200)

N = 3 Years

I/Y = 12%

So, the future value is :

FV = PV * (1 + r) ^n

= $200 * (1.12)^3

= $280.9856

(b) FV = $200

N = 3 years

I/Y = 12%

PV = FV/ (1 +r)^n

$200 / (1.12)^3

= $200/ 1.4049

= $142.3589

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