Question

In: Finance

Assume you invest $13,880 today for 9 years at a 4.1% continuously compounded rate of interest....

Assume you invest $13,880 today for 9 years at a 4.1% continuously compounded rate of interest.

How much money would you have at the end of the 9 years after the effects of compounding?

Solutions

Expert Solution

Formula for continuous compounding is

future value = present value *e^rt

where is e is math constant

r is rate = 4.1%

t is time = 9 years

fv = 13880*e^(0.041*9) = 20074.74

jeff jeffy answered 1 year ago
Next > < Previous

Related Solutions

You invest $75,000 today at a 5.5% annual rate that is compounded quarterly. After 8 years...
You invest $75,000 today at a 5.5% annual rate that is compounded quarterly. After 8 years the interest rate increases to an 7.5% rate compounded monthly. What is the investment worth in 18 years?
(a)       Suppose that you can invest with a continuously compounded rate of 5.25% per annum. (i)...
(a)       Suppose that you can invest with a continuously compounded rate of 5.25% per annum. (i)         If you invest $50,000 today, how many years will it take for your investment to be worth $1 million? (ii)        If you want your investment to grow to be $1 million in 10 years, how much do you need to invest today? (iii)      Compute the equivalent effective 1-year rate. (b)          Consider two stocks, Stock A and Stock B, where the CAPM...
4 You are planning to invest $2,500 today for three years at a nominal interest rate...
4 You are planning to invest $2,500 today for three years at a nominal interest rate of 9 percent with annual compounding. What would be the future value of your investment? 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? What would be the investment's future value in terms of purchasing power if inflation occurs at a 9 percent annual...
What is the present value of a lump sum of $2,000 deposited in 9 years at a rate of 12 percent compounded continuously?
What is the present value of a lump sum of $2,000 deposited in 9 years at a rate of 12 percent compounded continuously?(Please show step by step calculations. Also, a financial calculator can be used as well ,as long as each step is shown. )
You invest $x today at 8% APR compounded annually for 5 years (you invest only once)....
You invest $x today at 8% APR compounded annually for 5 years (you invest only once). Your friend also invests some amount at the same time at 8% APR compounded annually for 5 years. However, she invests an additional amount equal to the accumulated interest at the end of each year. You both end up having the same amount at the end of 5 years. In order to achieve this, your initial investment must have been t times as much...
You invest $x today at 8% APR compounded annually for 5 years (you invest only once)....
You invest $x today at 8% APR compounded annually for 5 years (you invest only once). Your friend also invests some amount at the same time at 8% APR compounded annually for 5 years. However, she invests an additional amount equal to the accumulated interest at the end of each year. You both end up having the same amount at the end of 5 years. In order to achieve this, your initial investment must have been t times as much...
The Bank quotes the interest rate on loans as 12% per annum continuously compounded. The interest...
The Bank quotes the interest rate on loans as 12% per annum continuously compounded. The interest is actually paid monthly on a $6911 loan. What is the interest payment (in $) of this loan per month?
a) You invest $117 today and expect to receive $183 in 13 years. What interest rate...
a) You invest $117 today and expect to receive $183 in 13 years. What interest rate are you expecting to earn? (Put rate in 4 decimal places.) b) You invest $291 at the end of each year for 25 years in an account earning 6.9%. How much do you expect to be able to withdraw in 25 years? (Note this is an ordinary annuity.)
If you invest $4,000 today, how much will you have in 5 years at 6% (compounded...
If you invest $4,000 today, how much will you have in 5 years at 6% (compounded semiannually)?
An investment pays 8% interest compounded continuously. If money is invested steadily at the rate of...
An investment pays 8% interest compounded continuously. If money is invested steadily at the rate of ​$16,000​, how much time is required until the value of the investment reaches $160000? 2) Given f'(t)=-0.5t-e^-2t, compute f(5)-f(3) 3) Find the area under the given curve over the indicated interval. y= 6x^2+x+3e^x/3; x=1 to x=5
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT