Calculate the future value of $2000 in a. five years at an interest rate of 5% per year; b. ten years at an interest rate of 5% per year; and c. five years at an interest rate of 10% per year. d. Why is the amount of interest earned in part (a) less than half the amount of interest earned in part (b)?

Calculate the future value of $2000 in

a. five years at an interest rate of 5% per year;

b. ten years at an interest rate of 5% per year; and

c. five years at an interest rate of 10% per year.

d. Why is the amount of interest earned in part (a) less than half the amount of interest earned in part (b)?

4.What is the present value of $10,000 received

a. twelve years from today when the interest rate is 4% per year;

b. twenty years from today when the interest rate is 8% per year; and

c. six years from today when the interest rate is 2% per year?

5.Your brother has offered to give you either $5,000 today or $10,000 in 10 years. If the interest rate is 7% per year, which option is preferable?

6.Consider the following alternatives.

i. $100 received in 1 year

ii. $200 received in 5 years

iii. $300 received in 10 years

a. Rank the alternatives from most valuable to least valuable if the interest rate is 10% per year.

b. What is your ranking if the interest rate is only 5% per year?

c. What is your ranking if the interest rate is 20% per year?