- Description
FP 120 Week 1 Time Value of Money Worksheet
Instructions
Complete the Time Value of Money Worksheet.
Post your Time Value of Money Worksheet as a Microsoft® Word® attachment.
Use the Bankrate Compound Interest Calculator and input personal figures, changing the interest rate and the compounding of the interest rate.
Submit your responses in a Microsoft® Word® document.
Time Value of Money
Refer: to Chapter 1 “Time Value of Money” section of Personal Finance.
In 50 to 100 words please respond to the following questions.
- What is the definition of Time Value of Money? Please define present and future value?
- How does compounding interest differ from present and future value?
For questions 3 – 5, use the Bankrate Compound Interest Calculator http://www.bankrate.com/calculators/savings/compound-savings-calculator-tool.aspx and input provided figures, changing the interest rate and the compounding of the interest rate (annually, semiannually, and quarterly) as delineated below:
- You place $1,500 in a savings account earning 3% interest compounded annually. How much will you have at the end of four years? How much would you have at the end of four years if interest is compounded quarterly?
- Change the interest rate to a higher rate. How much will you have at the end of four years if interest is compounded annually at a rate of 5%? How much would you have at the end of four years if interest is compounded quarterly?
- Now change the interest rate to a lower rate. How much will you have at the end of four years if interest is compounded annually at a rate of 2.5%? How much would you have at the end of four years if interest is compounded quarterly?
Submit your responses in a Microsoft Word document.