Explanation Given information: An investment with compound amount $ 50 , 000 is made for 25 years at 11 % interest compounded annually. Formula used: Compounding period can be calculated by formula given below: Compounding periods = Term of investments ( years ) × m Here, m is the period per year. The interest rate per period can be calculated by dividing the annual, or nominal, rate by the number of periods per year, Interest rate per period = Nominal rate Period per year The present value (principal) can be calculated by the formula given below: Principal = Table factor × Compound amount In table 11-2, the table factor is the intersection of the rate-per-period column and the number-of-periods row is the present value of $ 1 at compound interest. The compound interest can be calculated by the formula given below: Compound interest = Compound amount − Principal Calculation: Consider the statement as “An investment with compound amount $ 50 , 000 is made for 25 years at 11 % interest compounded annually” and solve as below: Since, the variables-compound amount, time period (years), nominal rate and interest compounded are given; therefore, the compounding period can be calculated as below: Compounding periods ( n ) = Term of investments ( years )

Contemporary Mathematics for Business & Consumers

8th Edition

ISBN: 9781305585447

Author: Robert Brechner, Geroge Bergeman

Publisher: Cengage Learning

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Chapter 11.II, Problem 5RE

To determine

To calculate: The present value (principal) and the compound interest for given investments with compound amount $50,000 is made for 25 years at 11% interest compounded annually using table also round your answer to the nearest cent.

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Chapter 11 Solutions

Contemporary Mathematics for Business & Consumers

Ch. 11.I - Gail Parker invested $10,000 at 6% interest...Ch. 11.I - Jenny Chao invested $20,000 at 6% interest...Ch. 11.I - Prob. 3TIE Ch. 11.I - Jill Quinn invested $7,000 in a certificate of...Ch. 11.I - Prob. 5TIE Ch. 11.I - Prob. 1RE Ch. 11.I - For the following investments, find the total...Ch. 11.I - For the following investments, find the total...Ch. 11.I - Prob. 4RE Ch. 11.I - Prob. 5RE

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The present value (principal) and the compound interest for given investments with compound amount $ 50 , 000 is made for 25 years at 11 % interest compounded annually using table also round your answer to the nearest cent.

Solution Summary: The author calculates the present value (principal) and the compound interest for given investments with compound amount 50,000.

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To calculate: The present value (principal) and the compound interest for given investments with compound amount $50,000 is made for 25 years at 11% interest compounded annually using table also round your answer to the nearest cent.

Chapter 11 Solutions