Time value You have $1,500 to invest today at 8% interest compounded annually.a. Find how much you will have accumulated in the account after (1) 3 years,(2) 6 years, and (3) 10 years.b. Use your findings in part a to calculate the amount of interest earned in (1)the first 3 years (years 1 to 3), (2) the second 3 years (years 4 to 6), and(3) the third 3 years (years 7 to 9).c. Compare and contrast your findings in part b. Explain why the amount ofinterest earned increases in each succeeding 3-year period.

(c)the interest earned is increasing for the same amount of time.This is because change in starting…

Answered: Time value You have $1,500 to invest…

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 6MC: You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years....

See similar textbooks

Similar questions

Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $2,500 over the next 4 years when the interest rate is 15%, how much do you need to deposit in the account? B. If you place $6,200 in a savings account, how much will you have at the end of 7 years with a 12% interest rate? C. You invest $8,000 per year for 10 years at 12% interest, how much will you have at the end of 10 years? D. You win the lottery and can either receive $750,000 as a lump sum or $50,000 per year for 20 years. Assuming you can earn 8% interest, which do you recommend and why?
You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.
You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
You have been depositing money into an account yearly based on the following investment amounts, rates and times. What is the value of that Investment account at the end of that period?
You decide to invest $7,500 into an account that pays 1.1% annual compound interest. Write an equation for the balance of the account (B) after t years.
1.You have $2,500 to invest today at 9% interest compounded on an annual basis.a. Find how much you will have accumulated in the account at the end of(1) 3 years, (2) 6 years, and (3) 9 years. (Hint: Calculate the FVs)b. Use your findings in part a to calculate the amount of interest received in (1) thefirst 3 years (years 1 to 3), (2) the second 3 years (years 4 to 6), and (3) the third3 years (years 7 to 9). 2.Abul plans to retire in exactly 20 years. His goal is tocreate a fund that will allow him to receive BDT 300,000 at the end of each year for the40 years between retirement and death (his wife told him that he would die exactly 40years after retirement). Abul knows that he will be able to earn 8% per year duringthe 40-year retirement period.a. How large a fund will Abul need when he retires in 20 years to provide the40-year, BDT 300,000 retirement annuity?b. How much will he need today as a single amount to provide the fund calculated in part a if heearns only 6% per year during…
Find the simple interest on a $1600 investment made for 3 years at an interest rate of 8%/year. What is the accumulated amount? (Round your answers to the nearest cent.) simple interest $ accumulated amount $
set up an equation and solve each problem. Suppose that $500 is invested at a certain rate of interest compounded annually for 2 years. If the accumulated value at the end of 2 years is $594.05, find the rate of interest.
Suppose that $10,000 is deposited into a saving account that earns 6% interest, compounded annually.a) Assuming that no additional deposits or withdrawals are made, use the appropriate compound interestfactors to determine how much the account will be worth:i) After 5 years;ii) After 20 years. b) Verify that your answers in part (a) are correct by constructing a table or spreadsheet that shows howthe initial deposit will grow each year over 20 years. At a minimum, your table or spreadsheet shouldinclude a row for each year and show: the amount of money in the savings account at the start of each year. the amount of interest earned each year; and the amount of money in the savings account at the end of each year, after interest is paid.Be sure to briefly explain how your table or spreadsheet verifies your results from part (a). c) Again assuming that no additional deposits or withdrawals are made, how many years will it take untilthere is at least $50,000 in the account?
1. Evaluate the following. a) Calculate the simple interest earned after investing $1000 at 8% interest for 5 years. Write out the formula first to show your work. b) Calculate the compound interest earned after investing $1000 at 8% interest for 5 years, compounded monthly. Write out the formula first to show your work.
Suppose you invest $1,250 in an account paying 8% interest per year. a. What is the balance in the account after 3years? How much of this balance corresponds to "interest on interest"? b. What is the balance in the account after 31 years? How much of this balance corresponds to "interest on interest"?
Example 1: Finding Future Value A person deposits $5000 into an account which pays interest at a rate of 8% per year. The amount in the account after 10 years is closest to: (A) $2,792 (B) $9,000 (C) $10,795 (D) $12,165

SEE MORE QUESTIONS

Recommended textbooks for you

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

Corporate Fin Focused Approach

Finance

ISBN:

9781285660516

Author:

EHRHARDT

Publisher:

Cengage

Excel Applications for Accounting Principles

Accounting

ISBN:

9781111581565

Author:

Gaylord N. Smith

Publisher:

Cengage Learning

Principles of Accounting Volume 2

Accounting

ISBN:

9781947172609

Author:

OpenStax

Publisher:

OpenStax College

Corporate Fin Focused Approach

Finance

ISBN:

9781285660516

Author:

EHRHARDT

Publisher:

Cengage

Excel Applications for Accounting Principles

Accounting

ISBN:

9781111581565

Author:

Gaylord N. Smith

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS