# FP 101 Week 2 Time Value of Money Worksheet

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FP 101 Week 2 Time Value of Money Worksheet

1. What is the definition of

2. How does compounding interest differ from present and future value?

http://www.bankrate.com/calculators/savings/compound-savings-calculator-tool.aspx and input provided figures, changing the interest rate, and the compounding of the interest rate (annually, semiannually, and quarterly) as delineated below:

3. You place $1,500 in a savings account earning 3% interest compounded annually. How much will you have at the end of four years? How much would you have at the end of four years if interest is compounded semiannually?

4. Change the interest rate to a higher rate. How much will you have at the end of four years if interest is compounded annually at a rate of 5%? How much would you have at the end of four years if interest is compounded semiannually?

5. Now change the interest rate to a lower rate. How much will you have at the end of four years if interest is compounded annually at a rate of 2.5%? How much would you have at the end of four years if interest is compounded semiannually?

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FP 101 Week 2 Time Value of Money Worksheet

**Complete**the Time Value of Money Worksheet.**Use****the***Bankrate Compound Interest Calculator*and input personal figures, changing the interest rate and the compounding of the interest rate.**Submit**your Time Value of Money Worksheet as a Microsoft® Word® attachment to the Assignment Files tab.**Time Value of Money Worksheet****Refer to:**Ch. 1, “Time Value of Money” section of*Personal Finance.***Respond**to the following questions in 50 to 100 words each.1. What is the definition of

*Time Value of Money*? Please define present and future value?2. How does compounding interest differ from present and future value?

**For**questions 3 – 5, use the Bankrate Compound Interest Calculatorhttp://www.bankrate.com/calculators/savings/compound-savings-calculator-tool.aspx and input provided figures, changing the interest rate, and the compounding of the interest rate (annually, semiannually, and quarterly) as delineated below:

3. You place $1,500 in a savings account earning 3% interest compounded annually. How much will you have at the end of four years? How much would you have at the end of four years if interest is compounded semiannually?

4. Change the interest rate to a higher rate. How much will you have at the end of four years if interest is compounded annually at a rate of 5%? How much would you have at the end of four years if interest is compounded semiannually?

5. Now change the interest rate to a lower rate. How much will you have at the end of four years if interest is compounded annually at a rate of 2.5%? How much would you have at the end of four years if interest is compounded semiannually?

**Submit**your responses in a Microsoft Word document.
You'll get 1 file (32.5KB)