Finance Homework

FN2640: Fundamentals of Finance > Week 1 > Complete Lab > Lab Elapsed Time: Time Remaining:

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Question 1 of 1: Present and Future Value You are planning to invest $2,500 today for three years at a nominal interest rate of 9 percent with annual compounding.

a. What would be the future value of your investment? b. Now assume that inflation is expected to be 3 percent per year over the same three-year period. What would be the

investment's future value in terms of purchasing power? c. What would be the investment's future value in terms of purchasing power if inflation occurs at a 9 percent annual rate?

Click here to access the worksheet for this assessment. Source textbook: Melicher, R. W., & Norton, E. A. (2011). Introduction to finance: Markets, investments, and financial management (14th ed.). Hoboken, NJ: John Wiley. Submission Requirements: Answer each problem in detail with a conclusion and results. Submit your answer in a Microsoft Excel file, showing step-by-step solutions to all calculations. Evaluation Criteria: You will be evaluated on the following points, using the rubric for your performance in this assessment:

• Did you calculate the future value of your investment accurately? • Did you calculate the future value of the investment in terms of purchasing power assuming the expected inflation of 3 percent

over three years? • Did you calculate the future value of the investment in terms of purchasing power if inflation occurs at a 9 percent annual rate?

Click here to download the rubric that will be used to evaluate this lab.

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