Answer the following questions using the following formulas:

Time Value of Money-Simple Interest

Future Value=Present Value x (1 + Interest Rate)

Compounding to Determine Future Value

Future Value = Present Value x [(1 + Interest Rate) x (1 + Interest Rate) x ….)]

Discounting to Determine Present Value

Present Value = Future Value x {[1/(1 + Interest Rate)] x [1/(1 + Interest Rate)]}

1.  You have been given $2,000.00 to save or invest for one year at an interest rate of 8.00%.  What will be the value of your savings after one year?

2.  You are planning to save for college tuition for a child.  You plan to invest $3,000.00 for two years and a bank will pay you compound interest of 7% per year.  What will be the value after two years?

3.  A bank agrees to pay you $2,500.00 after two years when interest rates are compounding at 7% per year.  What is the present value of the payment?

4. You plan to invest $1,000 now for two     years and a bank will pay you compound interest of 7% per year.  What will be the value after two years?

5. A bank agrees to pay you $2,000 after three years when interest rates are compounding at 10% per year.  What is the present value of this payment?