Question

In: Finance

Leslie Mosallam, who recently sold her Porsche, placed $9 comma 600 in a savings account paying...

Leslie Mosallam, who recently sold her Porsche, placed $9 comma 600 in a savings account paying annual compound interest of 7 percent.

a.Calculate the amount of money that will accumulate if Leslie leaves the money in the bank for 3, 7, and 17 year(s).

b.Suppose Leslie moves her money into an account that pays 9 percent or one that pays 11 percent. Rework part (a) using 9 percent and 11 percent.

c.What conclusions can you draw about the relationship between interest rates, time, and future sums from the calculations you just did?

Solutions

Expert Solution

a)

3 Years:

Future value = Present value (1 + r)ⁿ

Future value = 9600 (1 + 0.07)³

Future value = 9600 * 1.225043

Future value = $11,760.41

7 Years:

Future value = Present value (1 + r)ⁿ

Future value = 9600 (1 + 0.07)⁷

Future value = 9600 * 1.605781

Future value = $15,415.50

17 Years:

Future value = Present value (1 + r)ⁿ

Future value = 9600 (1 + 0.07)¹⁷

Future value = 9600 * 3.158815

Future value = $30,324.63

b)

3 Years and 9%

Future value = Present value (1 + r)ⁿ

Future value = 9600 (1 + 0.09)³

Future value = 9600 * 1.295029

Future value = $12,432.28

7 Years and 9%:

Future value = Present value (1 + r)ⁿ

Future value = 9600 (1 + 0.09)⁷

Future value = 9600 * 1.828039

Future value = $17,549.18

17 Years and 9%:

Future value = Present value (1 + r)ⁿ

Future value = 9600 (1 + 0.09)¹⁷

Future value = 9600 * 4.327633

Future value = $41,545.28

3 Years and 11%

Future value = Present value (1 + r)ⁿ

Future value = 9600 (1 + 0.11)³

Future value = 9600 * 1.367631

Future value = $13,129.26

7 Years and 11%:

Future value = Present value (1 + r)ⁿ

Future value = 9600 (1 + 0.11)⁷

Future value = 9600 * 2.07616

Future value = $19,931.34

17 Years and 11%:

Future value = Present value (1 + r)ⁿ

Future value = 9600 (1 + 0.11)¹⁷

Future value = 9600 * 5.895093

Future value = $56,592.89

c)

There is a direct relationship between Future value and time & interest rate. the greater the time and interest rate, higher will be the future value.

jeff jeffy answered 2 months ago

Next > < Previous

Related Solutions

Leslie? Mosallam, who recently sold her? Porsche, placed ?$9 comma 800 in a savings account paying...

Leslie? Mosallam, who recently sold her? Porsche, placed ?$9 comma 800 in a savings account paying annual compound interest of 6 percent. a.??Calculate the amount of money that will accumulate if Leslie leaves the money in the bank for 3?, 7?, and 17 ?year(s). b.??Suppose Leslie moves her money into an account that pays 8 percent or one that pays 10 percent. Rework part ?(a?) using 8 percent and 10 percent. c.??What conclusions can you draw about the relationship between...

Leslie Mosallam, who recently sold her Porsche, placed $9 comma 200 in a savings account paying...

Leslie Mosallam, who recently sold her Porsche, placed $9 comma 200 in a savings account paying annual compound interest of 7 percent. a. Calculate the amount of money that will accumulate if Leslie leaves the money in the bank for 2, 6, and 16 year(s). b. Suppose Leslie moves her money into an account that pays 9 percent or one that pays 11 percent. Rework part (a) using 9 percent and 11 percent. c. What conclusions can you draw about...

Leslie Mosallam, who recently sold her Porsche, placed $10 comma 20010,200 in a savings account paying...

Leslie Mosallam, who recently sold her Porsche, placed $10 comma 20010,200 in a savings account paying annual compound interest of 77 percent.a. Calculate the amount of money that will accumulate if Leslie leaves the money in the bank for 22, 66, and 1616 year(s).b. Suppose Leslie moves her money into an account that pays 99 percent or one that pays 1111 percent. Rework part (a) using 99 percent and 1111 percent. c. What conclusions can you draw about the relationship...

(Future value) Leslie Mosallam, who recently sold her Porsche, placed $8400 in a savings account paying...

(Future value) Leslie Mosallam, who recently sold her Porsche, placed $8400 in a savings account paying annual compound interest of 5 percent. a. Calculate the amount of money that will accumulate if Leslie leaves the money in the bank for 2, 6, and 16 year(s). b. Suppose Leslie moves her money into an account that pays 7 percent or one that pays 9 percent. Rework part (a) using 7 percent and 9 percent. c. What conclusions can you draw about...

(Future value) Leslie Mosallam, who recently sold her Porsche, placed $8400 in a savings account paying...

(Future value) Leslie Mosallam, who recently sold her Porsche, placed $8400 in a savings account paying annual compound interest of 6 percent. a. Calculate the amount of money that will accumulate if Leslie leaves the money in the bank for 3, 7, and 17 year(s). b. Suppose Leslie moves her money into an account that pays 10 percent or one that pays percent. Rework part (a) using 8 percent and 10 percent. c. What conclusions can you draw about the...

2. Leslie Mosallam, who recently sold her Porsche, placed $10,800 in a savings account paying annual...

2. Leslie Mosallam, who recently sold her Porsche, placed $10,800 in a savings account paying annual compound interest of 6 percent. Calculate the amount of money that will accumulate if Leslie leaves the money in the bank for 2, 6, and 16 year(s). B. Suppose Leslie moves her money into an account that pays 8 percent or one that pays 10 percent. Rework part (a) using 8 percent and 10 percent. What conclusions can you draw about the relationship between...

(Future value) Leslie Mosallam, who recently sold her Porsche, placed $10200 in a savings account paying...

(Future value) Leslie Mosallam, who recently sold her Porsche, placed $10200 in a savings account paying annual compound interest of 6 percent. a. Calculate the amount of money that will accumulate if Leslie leaves the money in the bank for 3, 7, and 17 year(s). b. Suppose Leslie moves her money into an account that pays 8 percent or one that pays 10 percent. Rework part (a) using 8 percent and 10 percent. c. What conclusions can you draw about...

Leslie Mosallam, who recently sold her Porsche, placed $8,600 in a savings account paying annual compound...

Leslie Mosallam, who recently sold her Porsche, placed $8,600 in a savings account paying annual compound interest of 5 percent. Calculate the amount of money that will accumulate if Leslie leaves the money in the bank for 2 6 and 16 years Suppose Leslie moves her money into an account that pays 7 percent or one that pays 9 percent Rework part (a) using 7 and 9 percent. What conclusions can you draw about the relationship between interest rates, time,...

Leslie Mosallam, who recently sold her Porsche, placed $9,600 in a savings account paying annual compound...

Leslie Mosallam, who recently sold her Porsche, placed $9,600 in a savings account paying annual compound interest of 5 percent. a. Calculate the amount of money that will accumulate if Leslie leaves the money in the bank for 2, 6, and 16 year(s). b. Suppose Leslie moves her money into an account that pays 7 percent or one that pays 9 percent. Rework part (a) using 7 percent and 9 percent. c. What conclusions can you draw about the relationship...

Leslie Mosallam, who recently sold her Porsche, placed $10,400 in a savings account paying annual compound...

Leslie Mosallam, who recently sold her Porsche, placed $10,400 in a savings account paying annual compound interest of 6 percent. a. Calculate the amount of money that will accumulate if Leslie leaves the money in the bank for 2, 6, and 16 year(s). b. Suppose Leslie moves her money into an account that pays 8 percent or one that pays 10 percent. Rework part (a) using 8 percent and 10 percent. c. What conclusions can you draw about the relationship...

ADVERTISEMENT

Subjects

ADVERTISEMENT

Latest Questions

ADVERTISEMENT