Question

1. Compute following based on chart (show your work)

a. Compute Present Value

Future value	Years	Interest Rate
$498	7	13%

b. Compute Future Value

Present Value	Years	Interest Rate
$123	13	13%

c. Compute time period (Years)

Present Value	Future Value	Interest Rate
$100	$348	12%

d. Compute the effective annual rate (EAR)

APR Stated Rate	Number of times compounded	Effective Rate
5%	Semiannually	?

Answer 1

a)
	present value =		=498/(1.13)^7
			211.68
b)	Future value =		=123*(1+13%)^13
			602.46
c)	we have to use financial calculator to solve this problem
	Put in calculator -
	PV		-100
	FV		348
	I		12%
	PMT		0
	Compute N		11	year
d)	APR =		5%
	semiannual compounding.
	effective rate =		=((1+5%/2)^2)-1
			5.06%