FINANCIAL ACCOUNTING
10th Edition
ISBN: 9781259964947
Author: Libby
Publisher: MCG
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Question
Assume you invest
$15,000
today. How much will you have in five years at an interest rate of 10%? Future Value of $1:
|
8%
|
9%
|
10%
|
1
|
1.080
|
1.090
|
1.100
|
2
|
1.166
|
1.188
|
1.210
|
3
|
1.260
|
1.295
|
1.331
|
4
|
1.360
|
1.412
|
1.464
|
5
|
1.469
|
1.539
|
1.611
|
6
|
1.587
|
1.677
|
1.772
|
$24,165
$23,085
$21,960
$26,580
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- Determine the present value P you must invest to have the future value A at simple interest rate r after time t. A = $19,000, r = 11.5%, t = 4 years The present value that must be invested to get $19,000 after 4 years at an interest rate of 11.5% is $. (Round up to the nearest cent.)arrow_forwardQuestion 3) The following questions are related to Continuously Compounded Interest: If you invest $2,000 at an annual interest rate of 8% compounded continuously, calculate the final amount you will have in the account after 20 years. If you invest $10,000 at an annual interest rate of 5% compounded continuously, calculate the final amount you will have in the account after ten years. Question 4) Suppose you want to save $100,000 for a down payment on a house in 15 years. If your savings account earns 9% compounded monthly, how much would you need to deposit now to reach this goal?arrow_forwardWhat is the rate of return (the interest rate) on an investment today of $30,626.24 if the company expects to receive $45,000 in 5 years? а. 9% O b. 8% С. 6% d. 7%arrow_forward
- 9 Suppose you invested $500 in a local credit union and: f(t) gives the future value of the investment in t years, if the APR is 2% and interest is compounded quarterly. • g(t) gives the future value of the investment in t years, if the APR is 2% and interest is compounded monthly. h(t) gives the future value of the investment in f years, if the APR is 2% and interest is compounded continuously. a. Write a function rule for f(t). For g(t). For h(t). Then describe how the rules are similar and how they are different. b. Based on your understanding of exponential growth, describe how the graphs of f(t), g(t), and h(t) are similar, and how they are different. c. On the same coordinate grid, use algebraic reasoning to sketch graphs of the three functions. .arrow_forwardSuppose you take out a 30-year mortgage for $ 225000 at 8.5% interest. The monthly payments on this loan are $ 1730.06. If you pay an extra 40% per month on your mortgage, how soon will you pay off the loan?New length in years = How much will you save in interest by making the extra payments?Saving = If you put $ 1730.06 per month into an annuity earning 10.25% interest compounded monthly for the remaining time on your original loan, how much money will you have at the end of the original 30 years?Extra savings =arrow_forwardProblem 1: You can choose between two different investments: (A) an annuity that pays $10,000 each year for the next 6 years; (B) a perpetuity that pays $10,000 forever, starting 11 years from now. 1. Which investment do you choose, A or B, if the interest rate is 5%? What if it is 10%? Explain in words the reason behind your choices.arrow_forward
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