Question

Please answer them correctly. Here are short 3 problems. Please solve all 3 problems. I would really appreciate your effort. Thanks.

1. You invest $260 in a mutual fund today that pays 6.30 percent interest annually. How long will it take to double your money? (If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round your final answer to 0 decimal place, e.g. 545)

Number of Years ______?

2. You decide to take advantage of the current online dating craze and start your own Web site. You know that you have 250 people who will sign up immediately and, through a careful marketing research and analysis, determine that membership can grow by 24 percent in the first two years, 19 percent in year 3, and 18 percent in Year 4. How many members do you expect to have at the end of four years? (Round intermediate calculations to 6 decimal places, in all cases round your final answer to the nearest whole number.)

Excel Template
(Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen for easy reference to the values you’ve been given here, and be sure to update any values that may have been pre-entered in the template based on the textbook version of the problem.)

Members at the end of four years ______?

3. You have just inherited $600,000. You plan to save this money and continue to live off the money that you are earning in your current job. If you can invest the money in a bond that pays 5.67 percent interest annually, how long will it be before your inheritance is worth $1 million? (If you solve this problem with algebra round intermediate calculations to 5 decimal places, in all cases round your final answer to 2 decimal places, e.g. 8.72.)

Inheritance will be worth $1 million in ____ years?

Answer 1

1)

Present value =260

i=6.30%

Future value = 260*2 = 520

Future value = present value(1+i)n

520 = 260 (1+.063)^n

520/260 = (1+.063)^n

   2 = (1.063)^n

To solve we will use Log values

Log 2 =n Log 1.063

n= Log 2 /Log 1.063

n= .30103/.026533

   = 11.35   (rounded to 11 years)

***Find Log values using financial calculator

2)

Immediate members	250
1	250(1+.24)=310
2	310(1+.240= 384.4
3	384.4(1+.19)=457.436
4	457.436(1+.18)= 539.77448   (rounded to 540)

Members at end of year4 = 540 members

3)

Present value =600000

i=5.67%

Future value =1000000

Future value = present value(1+i)n

1000000= 600000 (1+.0567)^n

1000000/600000 = (1+.0567)^n

   1.66667 = (1.0567)^n

To solve we will use Log values

Log 1.66667 =n Log1.0567

n= Log 1.66667 /Log 1.0567

n= .22185/.02395

   = 9.26 years

***Find Log values using financial calculator