Chapter 5, Problem 2 Student's Name:

Solution method uses FV function/formula

Guidelines: <-- To view guidelines, move mouse pointer over cell with red triangle. Red triangle identifies a c

Problem:
Future value: Ted Rogers is investing $7,500 in a bank CD that pays a 6 percent annual interest. How much will the
worth at the end of five years?

Unknown:
Value of investment at the end of five years.

Assumption(s)
Annual interest rate has annual compounding

Inputs: given information/arguments: Values Comments

Annual interest rate 6.00% Enter percentage as percent X.XX%, or decimal. .XXXX
Number of periods/years, nper 5.00 Enter investment life in years
Compounding frequency per year 1.00 Enter compounding frequency per year, here annual c
Annuity payment, pmt 0.00 Enter zero, not an annuity problem
Present value, pv 7,500.00 Enter initial investment as positive value
Type of annuity 0.00 Enter 0, not an annuity problem

Output: Solution method using FV function:

Excel FV function = 10,036.69
 Date:

triangle. Red triangle identifies a cell comment.

annual interest. How much will the CD be

e as percent X.XX%, or decimal. .XXXX

t life in years
ding frequency per year, here annual compounding
n annuity problem
stment as positive value
nnuity problem