1. You decide to deposit your high school graduation money gift of $1,000 into a savings account.
a. What formula would you use to compute its worth when you graduate from college in four years?
(1) PV (1 +
i)
n
(2) FV (1 −
i)
n
(3) FV (1 +
n)
i
(4) FV (1 −
n)
i
b. If you decided to use the reference table method and wanted to know the value of your deposit in four years, what factor would you use if your deposit was earning a 3% interest rate annually?
(1) 0.889
(2) 1.126
(3) 4.184
(4) 3.717
c. Using a calculator, which values would you use to solve for FV?
(1) N = 4; I/YR = 3; PV = 1000; PMT = 0
(2) N = 4; I/YR = 3; PV = 0; PMT = 10000
(3) N = 4; I/YR = 3; PV = −1000; PMT =
(4) N = 4; I/YR = 3; PV = 0; PMT = −1000
d. What would be the value of the gift money upon graduation from college, assuming you graduate in four years?
(1) $1,418.36 (3) $1,371.71
(2) $1,888.50 (4) $1,125.51