In: Finance
13.
our brother, who is 6 years old, just received a trust fund that will be worth $25,000 when he is 21 years old. If the fund earns 10 percent interest compounded annually, what is the value of the fund today?
Group of answer choices
$104,602
$6,575
$5,975
$6,875
14.
You deposited $2,000 seven years ago and haven’t touched the account since. Now you have $3,656 in the bank. What was the interest rate?
Group of answer choices
6%
7%
8%
9%
15.
Find the future value in two years of $100 that is deposited in an account, which pays 12%, compounded monthly.
Group of answer choices
$160.00
$112.70
$118.80
$125.40
$126.97
13) The correct answer is option 3
The value of the fund today is found using the following equation
The value of the fund today $ 5975
---------------------------------------------------------------------------
14) The correct answer is option 4
The interest rate is calculated using the following equation
Future value = Present value ( 1 + interest rate ) n
$ 3656 = $ 2000 ( 1 + interest rate) 7
( 1 + interest rate) 7 = $ 3656 $ 2000 = 1.828
( 1 + interest rate) 7 = 1.828
1 + interest rate =
Interest rate = 9%
------------------------------------------------------------------------------------
15) The correct answer is option 5
Future value = Present value ( 1 + interest rate) n
Future value in two years = $ 126.97