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FUTURE VALUE If you deposit $2,000 in a bank account that pays 6% interest annually, 5-1 how much will be in your account after 5 years? PRESENT VALUE What is the present value of a security that will pay $29,000 in 20 years 5-2 if securities of equal risk pay 5% annually? FINDING THE REQUIRED INTEREST RATE Your parents will retire in 19 years. They rently have $350,000 saved, and they think they will need $800,000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any addi- tional funds? 5-3 cur- If you deposit money today in an account that paye 5-4 TIME FOR A LUMP SUM TO DOUBLE 4% annual interest, how long will it take to double your money? TIME TO REACH A FINANCIAL GOAL You have $33,556.25 in a brokerage account, and you plan to deposit an additional $5,000 at the end of every future year until your account totals $220,000. You expect to earn 12% annually on the account. How many years will it take to reach your goal? 5-5 5-6 FUTURE VALUE: ANNUITY VERSUS ANNUITY DUE What's the future value of a 5%, 5-year ordinary annuity that pays $800 each year? If this was an annuity due, what would its future value be? 5-7 PRESENT AND FUTURE VALUES OF A CASH FLOW STREAM An investment will pay $150 at the end of each of the next 3 years, $250 at the end of Year 4, $300 at the end of Year 5, and $500 at the end of Year 6. If other investments of equal risk earn 11 % annually, what is its present value? Its future value

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