A student is trying to value an internship opportunity for theupcoming summer. The internship will...

A student is trying to value an internship opportunity for the upcoming summer. The internship will last three months and pay her $2,336.00 at the end of each month. She will also get a “signing” bonus at the beginning of the internship for $650.00. If the student can invest this money in an account that pays 5.64% APR with monthly compounding, what is the value of her account at the end of her internship?

Solutions

Expert Solution

Monthly interest rate = 5.64%/12 = 0.0047

Part 1: The future value of monthly payments

Part 2: The future value of signing bonus

FV = PV * (1 + r)^n

FV = 650 * (1 + 0.0047)^3

FV = 650 * 1.0141663738

FV = $659.20814297

Add results from Part 1 and Part 2

The value of her account at the end of her internship = 7,040.9892007489 + 659.20814297

The value of her account at the end of her internship = $7,700.1973437189

jeff jeffy answered 2 years ago

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