Question: Part 1. (Formula Practice) Please write formulas ONLY. (DON'T WASTE YOUR TIME HERE TO FIND THE ANSWER.) Assume annual compounding, unless otherwise specified.
1. Compute the present value of $500 to be received in 3 years. The discount rate is 5 percent.
2. Compute the future value of $500 that you invested today in 3 years. The interest rate is 5 percent.
3. You have $1,000 to deposit. Regency Bank offers 12 percent per year compounded monthly (i.e., 1 percent per month). Compute the future value of your deposit in 10 years.
4. Suppose you have $100 to invest. If you want to receive $500 at the interest rate of 10%, how long will you have to have it invested?
5. Suppose you have $100 to invest. If you want to receive $500 at the interest rate of 10% annually, but compounded quarterly, how long will you have to have it invested? Predict your answer compared to (4). Will it be longer or shorter than the answer from (4)?