Question

1) On March 1, 2016 an amount of $2100 was invested in an account which earns 7.5%. Determine the balance on September 1, 2019, if the interest is compounded: a) quarterly AND b) monthly?

2) How much should be invested at 6% compounded semiannually to acquire $2000 in eight years?


3) On July 15th, 2013, $800 was invested in an account paying 10% compounded semiannually. Then on July 15, 2017 the money was reinvested in an account paying 8% compounded daily. Determine the balance on October 20, 2017 using the Banker's Rule.

Answer 1

1

a

EAR = [(1 +stated rate/no. of compounding periods) ^no. of compounding periods - 1]* 100

? = ((1+7.5/(4*100))^4-1)*100

Effective Annual Rate% = 7.7136

Future value = present value*(1+ rate)^time

Future value = 2100*(1+0.077136)^3.5

Future value = 2723.74

b

EAR = [(1 +stated rate/no. of compounding periods) ^no. of compounding periods - 1]* 100

? = ((1+7.5/(12*100))^12-1)*100

Effective Annual Rate% = 7.7633

Future value = present value*(1+ rate)^time

Future value = 2100*(1+0.077633)^3.5

Future value = 2728.14

2

EAR = [(1 +stated rate/no. of compounding periods) ^no. of compounding periods - 1]* 100

? = ((1+6/(2*100))^2-1)*100

Effective Annual Rate% = 6.09

Future value = present value*(1+ rate)^time

2000 = Present value*(1+0.0609)^8

Present value = 1246.33

Please ask remaining parts seperately, questions are unrelated, I have done one bonus