Relationship between discounting and compounding

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1) What is the relationship between discounting and compounding?

2) Compute the following:

a) You invest $16,000 today at 9 percent per year. How much will you have after 15 years?

b) What is the current value of $130,000 after 10 years if the discount rate is 12 percent?

c) You invest $3,500 a year (at the end of a period) for 20 years at 11 percent. How much will you have after 20 years?

3) How much should you set aside each year (end of the period) to accumulate $80,000 after 15 years? The interest rate is 10 percent.

*Use the PV-FV tables to solve all problems and show how you arrived at your answer.

Reference no: EM133073580

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