Time Value of Money - Six Functions of a Dollar
Using Assessors’ Handbook Section 505 (Capitalization Formulas and Tables)
Appraisal Training: Self-Paced Online Learning Session

# Lesson 4: Future Worth of \$1 per Period

In order to solve the following problems you will need to refer to AH 505 to look up the factors in the compound interest tables. Before you start, please print the problems using the "Print Questions" button below so you can work through the problems on your own. After you work through the problem, the solution can be viewed by clicking on the blue plus sign immediately following the question. Additionally, when you have completed all the problems, you may print all of the solutions using the "Print Questions with Answers" button below.

## Problem 1

Calculate the future value of each payment (PMT) listed below using the future worth of \$1 per period (FW\$1/P) factors in AH 505:

Solution

## Problem 2

You invest \$2,000 in an IRA account at the end of each year for 20 years. Assuming an annual interest rate of 8%, with annual compounding, how much will you have at the end of 20 years?

Solution

## Problem 3

A property generates \$15,000 annually over a seven-year period. At the end of each year, the income is deposited into an account that pays interest of 6 percent, compounded annually. How much will be in the account after seven years?

Solution

## Problem 4

A friend plans to invest \$2,000 in an IRA account at the end of each year, starting when she is 25 years old and continuing until her expected retirement at age 65 (40 years later). She expects to earn an annual return of 8% a year on her investment. What is the expected value of the account on her retirement date?

Solution

## Problem 5

You deposit \$1,000 at the end of each month, earning an annual rate of 12% with monthly compounding. How much will you have at the end of 15 years?

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## Problem 6

Johnny will begin college in 18 years. If you deposit \$100 at the end of each month for the next 18 years in Johnny´s college fund, how much will Johnny have for college? Assume an earnings rate of 9% compounded monthly.

Solution