# FP 120 Week 1 Time Value of Money Worksheet

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FP 120 Week 1 Time Value of Money Worksheet

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## FP 120 Week 1 Time Value of Money Worksheet

Instructions

Complete the Time Value of Money Worksheet.

Post your Time Value of Money Worksheet as a Microsoft® Word® attachment.

Use the Bankrate Compound Interest Calculator and input personal figures, changing the interest rate and the compounding of the interest rate.

Submit your responses in a Microsoft® Word® document.

Time Value of Money

Refer: to Chapter 1 “Time Value of Money” section of Personal Finance.

In 50 to 100 words please respond to the following questions.

1. What is the definition of Time Value of Money? Please define present and future value?

1. 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.aspxand input provided figures, changing the interest rate and the compounding of the interest rate (annually, semiannually, and quarterly) as delineated below:

1. 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 quarterly?

1. 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 quarterly?

1. 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 quarterly?

Submit your responses in a Microsoft Word document.

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