You received $2,500 at your graduation party and have decided to invest it in a stock index fund that earns 8% annually, but pays semi-annually. How much will you have 5 years from now?

Q: You expect that you will work for 40 years from now and then you will retire. To retire comfortably,…

A: Annuity refers to periodic payments that are provided in exchange for a lump sum payment. Annuities…

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Q: You expect to receive $10,500 at graduation in three years. You plan on Investing it at 12% until…

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Q: You are planning to save for retirement over the next 35 years. To do this, you will invest $660 per…

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A: Future value = Present value*(1+rate)^no of years

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A: The question gives the following information:

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Present Value

Present value (PV) is defined as the current or present value of all future sums of cash flow or money at a specified rate of return. This rate of return is known as the discounted rate, which is essentially the interest rate, discounted over some time. The expected cash flows are discounted at a discount rate to compute the present value. The higher the discount rate, the higher the future value (FV), but the lower the present value.