Answer:
The interest rates implied by the combinations of present and future values are:
Present Value Years Future Value Interest Rate
$310 12 496 3.994%
138 5 194 7.049%
210 8 210 -0.000%
Step-by-step explanation:
a) Data and Calculations:
Present Value Years Future Value Interest Rate
$310 12 496 3.994 %
138 5 194 7.049%
210 8 210 -0.000%
b) You will need an annual return rate of 3.994% to reach the future value of $496.00.
FV (Future Value) $496.00
PV (Present Value) $310.00
N (Number of Periods) 12.000
I/Y (Interest Rate) 3.994%
PMT (Periodic Payment) $0.00
Starting Investment $310.00
Total Principal $310.00
Total Interest $186.00
c) You will need an annual return rate of 7.049% to reach the future value of $194.00.
FV (Future Value) $194.00
PV (Present Value) $138.00
N (Number of Periods) 5.000
I/Y (Interest Rate) 7.049%
PMT (Periodic Payment) $0.00
Starting Investment $138.00
Total Principal $138.00
Total Interest $56.00
d) You will need an annual return rate of -0.000% to reach the future value of $210.00.
FV (Future Value) $210.00
PV (Present Value) $210.00
N (Number of Periods) 8.000
I/Y (Interest Rate) -0.000%
PMT (Periodic Payment) $0.00
Starting Investment $210.00
Total Principal $210.00
Total Interest $-0.00
