Question

a. Find the FV of $1,000 invested to earn 10% annually 5 years from now. Answer this question by using a math formula and also by using the Excel function wizard,
Inputs: PV = 1000
I/YR = 10%
N = 5
Formula: FV = PV(1+I)^N =
Wizard (FV): $1,610.51

Answer 1

Answer:

$1,610.51 (in both calculation)

Explanation:

1. Using Math formula,

We know, Future value, FV = PV × $(1 + i)^{n}$

Given,

Present Value, PV = $1,000

Interest, i = 10% = 0.10

Number of periods, n = 5 years

Putting the values in the formula, we can get,

Future value, FV = PV × $(1 + i)^{n}$

FV = $1,000 × $(1 + 0.10)^{5}$

or, FV = $1,000 × 1.61051

Therefore, FV = $1,610.51

2. Using excel formula,

See the image below:

We have to use present value as negative so that the result should be used as positive.