Question

a. Suppose you deposited $2,000 in a savings account earning 3.6% interest compounding daily. How long will it take for the balance to grow to $8,000? Answer in years rounded to two decimal places. (e.g., 2.4315 years --> 2.43)

b.You plan to deposit $2,000 today, $4,000 in one year and $2,000 in two years into an account earning 5.1% interest. What will the account balance be in 4 years? Round to the nearest cent.

Answer 1

ans a)	we have to use financial calculator to solve this
	Put in calculator
	FV		8,000
	PV		-2,000
	PMT		0
	I	3.6%/365	0.00986%
	compute N	14,056	Days
	Number of year =	38.51	Year
	14056/365
	Answer =		38.51	Year
ans b)
	Computation of future value
	Year	Present value	future value at 4th year	Formula
	0	2,000	$     2,440.29	2000*(1+5.1%)^4
	1	4,000	$     4,643.74	4000*(1+5.1%)^3
	2	2000	$     2,209.20	2000*(1+5.1%)^2
	Total		$     9,293.23
	Answer =		$     9,293.23