JRT Publishers invests P100,000 today to be repaid in five years in one lump sum at 12% compounded annually. If the inflation is 4% compounded annually. How much profit, in today’s pesos, if realized over the five-year period? Formulas: a) Solving for the future account (F) F = P(1+i)ⁿ b) Solving for the equivalent future amount in today’s pesos due to 4% inflation: P = F / (1+ i)ⁿ c) Profit = P – F
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JRT Publishers invests P100,000 today to be repaid in five years in one lump sum at 12% compounded annually. If the inflation is 4% compounded annually. How much profit, in today’s pesos, if realized over the five-year period? Formulas: a) Solving for the future account (F) F = P(1+i)ⁿ b) Solving for the equivalent future amount in today’s pesos due to 4% inflation: P = F / (1+ i)ⁿ c) Profit = P – F
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- If an initial investment of $1,000 is invested at 8% interest per year with semi-annual compounding, how much would be in the account after five years? A. $1,081.60 B. $1,061.66 C. $1,051.00 D. $1,281.60 The difference between the present and future worth of money at some time in the future is called A. Discount B. Deduction C. Inflation D. Depletion(a) Find the present and future value of an income stream of $6000 per year for a period of 10 years if the interest rate, compounded continuously, is 2%. Round your answers to two decimal places. Present value = $ Future value $ (b) How much of the future value is from the income stream? How much is from interest? Round your answers to two decimal places. The amount from the income stream is $ The amount from the interest is $Use the formula A = Pert to find the future value after 20 years of a $7,000 account that earns 8% interest compounded continuously, then compare that to the future value of the same account if interest is compounded annually. Round to the nearest cent. The future value of the account with interest compounded continuously is The future value of the account with interest compounded annually is The account earns $____ (what dollar amount) [more/less] when interest is compounded continuously %24
- A company would like to have $400,000 in 6 years. How much should be invested semiannually into an account paying 3.6% compounded semiannually? 7. Identify the type of problem. a. Present Value with compound interest b. Future Value of an Annuity c. Present Value of an Annuity d. Amortization e. Sinking Fund 8. Answer the question in the problem. a. $30,681.38 b. $29,754.02. c. $34,245.54 d. $30,160.79 c. $28,541.46You make an investment into a money market account at time T=0. In year T=5, the value of the money market account will be $5,000. The money market account pays an annual interest of R=6%, and interest is compounded on a quarterly basis. What is the present value of this account?At a 10% interest rate, what is the future sum at year 5, that is equivalent to the series of payments in the given cashflow: Year 1 Year 2 $1,400 $7,660 $7,616 $7,212 $1.320 $5,995 Year 3 $1,240 Year 4 $1,190 Year 5 $1,000
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