Question

Q6) If you deposit $92,360 at 09.00% annual interest compounded quarterly, how much money will be in the account after 12 years?

Q7) If you deposit $907 into an account paying 05.00% annual interest compounded monthly, how many years until there is $7,655 in the account?

Q8) What is the value today of receiving a single payment of $91,870 in 8 years if your required rate of return on this investment is 30.00% compounded semi-annually?

Q9) If you deposit $573 at 16.00%annual interest compounded daily, how much money will be in the account after 23 years? (Assume that there are 364 days in a year)

Q10) Suppose you deposit $447 today, $197 in one year, and $195 in two years in an account that pays an annual rate of interest of 13.00%. How much money will be in the account after three years?

Answer 1

6.We use the formula:
A=P(1+r/4)^4n
where
A=future value
P=present value
r=rate of interest
n=time period.

A=$92360*(1+0.09/4)^(4*12)

=$92360*2.909639612

=$268,734.31(Approx).

7.

We use the formula:
A=P(1+r/12)^12n
where
A=future value
P=present value
r=rate of interest
n=time period.

7655=907*(1+0.05/12)^12n

(7655/907)=(1.004167)^12n

Taking log on both sides;

log(7655/907)=12n*log(1.004167)

n=1/12[log(7655/907)/log(1.004167)]

=42.75 years(Approx).

8.

We use the formula:
A=P(1+r/2)^2n
where
A=future value
P=present value
r=rate of interest
n=time period.

91870=P*(1+0.3/2)^(2*8)

P=91870/(1+0.3/2)^(2*8)

=$91870*0.106864769

=$9817.67(Approx).

9.

We use the formula:
A=P(1+r/364)^364n
where
A=future value
P=present value
r=rate of interest
n=time period.

A=$573(1+0.16/364)^(364*23)

=$573*39.61435077

=$22699.02(Approx).

10.

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

A=447*(1.13)^3+197*(1.13)^2+195*(1.13)

=$1116.87(Approx).