Question

In: Finance

If you invest $10,000 today and earn 7% per year, how much total interest will you...

If you invest $10,000 today and earn 7% per year, how much total interest will you make in 20 years? How much is simple interest and how much is due to compounding?

Solutions

Expert Solution

Simple Interest:

Simple interest earned for 20 years = Investment * Rate * 20

= 10000 * 7% * 20

= 14000

Compound interest:

Compound interest earned over 20 years = Investment * (1+ Rate)^20 - Investment

= 10000 * (1+7%)^20 - 10000

= 38696.84 - 10000

= 28696.84

Interest earned due to compounding = Total compound interest - SImple interest

= 28696.84 - 14000

= 14696.84

jeff jeffy answered 2 years ago
Next > < Previous

Related Solutions

If you invest $1,000 today at an interest rate of 10% per year, how much will...
If you invest $1,000 today at an interest rate of 10% per year, how much will you have 20 years from now, assuming no withdrawals in the interim? What is the present value of the following cash flows at an interest rate of 10% per year? $100 received five years from now. $100 received 60 years from now. $100 received each year beginning one year from now and ending 10 years from now. $100 received each year for 10 years...
Today, you invest $5,000 in an investment that pays 3% per year. How much will your...
Today, you invest $5,000 in an investment that pays 3% per year. How much will your investment be worth in 5 years?
You invest $35,000 today and $3800 per year for 30 years. Assuming you earn an 8.4%...
You invest $35,000 today and $3800 per year for 30 years. Assuming you earn an 8.4% rate of return, how much will you have at the end of the 30th year? How much more do you have after 40 years? Of that additional money, how much came from your contributions and how much from investment income? Show work hand written
You invest $35,000 today and $3800 per year for 30 years. Assuming you earn an 8.4%...
You invest $35,000 today and $3800 per year for 30 years. Assuming you earn an 8.4% rate of return, how much will you have at the end of the 30th year? How much more do you have after 40 years? Of that additional money, how much came from your contributions and how much from investment income?
Suppose you have $400 to invest today at 7%, how much will you have saved in...
Suppose you have $400 to invest today at 7%, how much will you have saved in 20 years? You have an opportunity to invest in a UK Consol Bond that will pay you $40 quarterly forever, if the opportunity cost of your funds is 12%, what is fair market price for you to pay? In general the easiest form of organization to raise large amounts of capital quickly is Which of the following is NOT an example of an agency...
Show All Work If you invest $2,000 per year starting one year from today, how much...
Show All Work If you invest $2,000 per year starting one year from today, how much will you have: a. After 10 years at 8 percent annual return b. After 30 years at 10 percent annual return
You invest $10,000 today into a retirement account. You expect to earn 11 percent, compounded monthly,...
You invest $10,000 today into a retirement account. You expect to earn 11 percent, compounded monthly, on your money for the next 25 years. After that, you want to be more conservative, so only expect to earn 7 percent, compounded semi-annually. How much money will you have in your account when you retire 40 years from now, assuming that this is the only deposit you make into the account? A. $443,908 B. $397,062 C. $441,387 D. $483,928 E. $433,590
Suppose you invest $10,000 into a fund paying 3.6% annual interest. How much will you have...
Suppose you invest $10,000 into a fund paying 3.6% annual interest. How much will you have after 5 years is the interest is compounded: a) Annually b) Semi-Annually c) Quarterly d) Monthly
Show All Work If you invest $20,000 today, how much will you have after: a. 7...
Show All Work If you invest $20,000 today, how much will you have after: a. 7 years at a 5 percent annual return b. 10 years at a 7 percent annual return
1. How much money should you invest today at 8% interest to get it to increase...
1. How much money should you invest today at 8% interest to get it to increase to $ 15,000 in 10 years? 2. What annual interest rate will make $ 500 increase to $ 1,948 in 12 years? 3. Suppose you have won the lottery. You will be receiving $ 72,000 at the end of each year for the next 20 years. Now it turns out that a financial firm offers you the total amount of $ 650,000 at the...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT