QUESTION:1 You make a fixed deposit of $1,25,000 in

Canara Bank for five years. The annual interest rate is

12%. How much total amount will you receive after
five years if the interest is compounded monthly?

ANSWER:
Here, present value(PV)=$125000
Interest rate(r)=12%
=0.12
Number of years(n)=5
Compounding period(m)= 12
We know,
FV=PV(1+r/m)^nm
FV=1,25,000(1+.12/12)^5*12
FV=1,25,000*(1.01)^60
FV=1,25,000*1.816
FV= 227087.087
So, the future value is $227087.087

FINANCIAL MANAGEMENT
ELEVENTH EDITION
I M PANDEY
QUESTION 2: You have $2000 to invest. You decide to invest
it for 7 years in an account that pays you an interest of 6%.
How much will your investment grow to in 3 years if the
interest is compounded quarterly?

ANSWER:
Here, present value(PV)=$2000
Interest rate(r)=6%
=0.06
Number of years(n)=7
Compounding periods(m)=4
We know,
FV=PV(1+r/m)^nm
FV=2000(1+.06/4)^7*4
FV=2000*(1.015)^28
FV=2000*1.5172
FV=3034.444
So, the future value is $3034.444

Fincertain.com

QUESTION 3: You have $12,000 to invest. You decide to

invest it for 5 years in an account that pays you an
interest of 10%. How much will your investment grow to
in 5 years if the interest is compounded semi-annually?

ANSWER:
Here, present value(PV)=$12000
Interest rate(r)=10%
=0.10
Number of years(n)=5
Compounding periods(m)=2
We know,
FV=PV(1+r/m)^nm
FV=12000(1+.10/2)^5*2
FV=12000*(1.05)^10
FV=12000*1.6288
FV=19546.735
So, the future value is $19546.735

FUNDEMENTALS OF FINANCE
13th EDITION
James C. Van Horne, John M.Wachowicz Jr.

QUESTION 4: The calculation for the five-year value of a

$1,700 investment and 10% if interest is compounded
weekly.
ANSWER:
Here, present value(PV)=$1700
Interest rate(r)=10%
=0.10
Number of years(n)=5
Compounding periods(m)=52
We know,
FV=PV(1+r/m)^nm
FV=1700(1+.10/52)^5*52
FV=1700*(1.0019)^260
FV=1700*1.647
FV=2801.480
So, the future value is $2801.480

Business.org

QUESTION5: The calculation for the ten-year value of a

$5000 investment and 13% if interest is compounded
daily.
ANSWER:
Here, present value(PV)=$5000
Interest rate(r)=13%
=0.13
Number of years(n)=10
Compounding periods(m)=365
We know,
FV=PV(1+r/m)^nm
FV=5000(1+.13/365)^10*365
FV=5000*(1.00035)^3650
FV=5000*3.6684
FV=18342.237
So, the future value is $18342.237

PRINCIPLES OF MANAGERIAL FINANCE

14th EDITION
LAWRENCE J. GITMAN