Question

In: Finance

ust for fun, let’s say that your money actually could grow as fast as the rabbit...

ust for fun, let’s say that your money actually could grow as fast as the rabbit population in Australia grew, which is approximately equal to an APY of 29%. Assuming that you found a bank that would pay 29% APY and you deposited $250 into your account,

how much money would you have in your account after 1 year? After 2 years? After 5, 7, and 10 years? (Round answers to 2 decimal places, e.g. 52.75.)

Solutions

Expert Solution

Information provided:

Present value= $250

Interest rate= 29%

1.The value after 1 year is computed by calculating the future value.

The future value is calculated by entering the below in a financial calculator:

PV= -250

I/Y= 29

N= 1

Press the CPT key and FV to calculate the future value.

The value obtained is 322.50.

Therefore, the money in the account after 1 year is $322.50.

2.The value after 2 years is computed by calculating the future value.

The future value is calculated by entering the below in a financial calculator:

PV= -250

I/Y= 29

N= 2

Press the CPT key and FV to calculate the future value.

The value obtained is 416.03.

Therefore, the money in the account after 2 years is $416.03.

3. The value after 5 years is computed by calculating the future value.

The future value is calculated by entering the below in a financial calculator:

PV= -250

I/Y= 29

N= 5

Press the CPT key and FV to calculate the future value.

The value obtained is 893.08.

Therefore, the money in the account after 5 years is $893.08.

4.The value after 7 years is computed by calculating the future value.

The future value is calculated by entering the below in a financial calculator:

PV= -250

I/Y= 29

N= 7

Press the CPT key and FV to calculate the future value.

The value obtained is 1,486.17.

Therefore, the money in the account after 7 years is $1,486.17.

5.The value after 7 years is computed by calculating the future value.

The future value is calculated by entering the below in a financial calculator:

PV= -250

I/Y= 29

N= 10

Press the CPT key and FV to calculate the future value.

The value obtained is 3,190.34

Therefore, the money in the account after 10 years is $3,190.34

In case of any query, kindly comment on the solution.

jeff jeffy answered 1 year ago

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