Question

In: Finance

13. our brother, who is 6 years old, just received a trust fund that will be...

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

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

Solutions

Expert Solution

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

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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%

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15) The correct answer is option 5

Future value = Present value ( 1 + interest rate) n

Future value in two years = $ 126.97

jeff jeffy answered 1 year ago

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