Today

$5,000 Today and Tomorrow

Based on your reading in the textbook, write your answers to the following questions:

1. Calculate the present value of $5,000 received 5 years from today if your investments pay:
   1. 6 percent compounded annually.
   2. 8 percent compounded annually.
   3. 10 percent compounded annually.
   4. 10 percent compounded semiannually.
   5. 10 percent compounded quarterly.
2. What do your answers to these questions tell you about the relation between present values and interest rates and between present values and the number of compounding periods per year?
3. Calculate the future value in five years of $5,000 received today if your investments pay:
   1. 6 percent compounded annually.
   2. 8 percent compounded annually.
   3. 10 percent compounded annually.
   4. 10 percent compounded semiannually.
   5. 10 percent compounded quarterly.
4. What do your answers to these questions tell you about the relation between future values and interest rates and between future values and the number of compounding periods per year?