Foundations Of Finance
10th Edition
ISBN: 9780134897264
Author: KEOWN, Arthur J., Martin, John D., PETTY, J. William
Publisher: Pearson,
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Textbook Question
Chapter 5, Problem 6SP
(Compound value) Stanford Simmons, who recently sold his Porsche, placed $10,000 in a savings account paying annual
- a. Calculate the amount of money that will have accrued if he leaves the money in the bank for 1, 5, and 15 years.
- b. If he moves his money into an account that pays 8 percent or one that pays 10 percent, rework part (a) using these new interest rates.
- c. What conclusions can you draw about the relationship between interest rates, time, and future sums from the calculations you have completed in this problem?
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Check out a sample textbook solutionStudents have asked these similar questions
(Compound
value)
Stanford Simmons, who recently sold his Porsche, placed
$8,600
in a savings account paying annual compound interest of
6
percent.
a. Calculate the amount of money that will have accrued if he leaves the money in the bank for
2,
5,
and
15
years.
b. If he moves his money into an account that pays
8
percent or one that pays
10
percent, rework part
(a)
using these new interest rates.
c. What conclusions can you draw about the relationship between interest rates, time, and future sums from the calculations you have completed in this problem?
a. What is the accrued value of
$8,600
in a savings account paying annual compound interest of
6
percent for
2
years?
$nothing
(Round to the nearest cent.)
1.) Leslie Mosallam, who recently sold her Porsche, placed RM10,000 in a savings account paying annual compound interest of 6 percent. Calculate:
The amount of money that will accumulate if Leslie leaves the money in the bank for 1, 5 and 15 years.
Suppose Leslie moves her money into an account that pays 8 percent or one that pays 10 percent. Rework part (a) using 8 percent and 10 percent.
What conclusions can you draw about the relationship between interest rates, time and future sums form the calculations you just did?
Ronald Gonzales, who recently sold his Bicycle, placed P10,000 in a savings account paying
annual compound interest of 6 percent.
a. Calculate the amount of money that will have accrued if he leaves the money in the bank
for 1, 5, and 15 years.
b. b. If he moves his money into an account that pays 8 percent or one that pays 10 percent,
rework part (a) using these new interest rates.
c. What conclusions can you draw about the relationship between interest rates, time, and
future sums from the calculations you have done above?
Chapter 5 Solutions
Foundations Of Finance
Ch. 5 - Prob. 1RQCh. 5 - The processes of discounting and compounding are...Ch. 5 - Prob. 3RQCh. 5 - Prob. 4RQCh. 5 - Prob. 5RQCh. 5 - Prob. 1SPCh. 5 - Prob. 2SPCh. 5 - Prob. 3SPCh. 5 - Prob. 4SPCh. 5 - Prob. 5SP
Ch. 5 - (Compound value) Stanford Simmons, who recently...Ch. 5 - (Future value) Sarah Wiggum would like to make a...Ch. 5 - Prob. 8SPCh. 5 - (Future value) Giancarlo Stanton hit 59 home runs...Ch. 5 - Prob. 10SPCh. 5 - Prob. 11SPCh. 5 - Prob. 12SPCh. 5 - Prob. 13SPCh. 5 - Prob. 14SPCh. 5 - Prob. 15SPCh. 5 - Prob. 16SPCh. 5 - Prob. 17SPCh. 5 - Prob. 18SPCh. 5 - Prob. 19SPCh. 5 - Prob. 20SPCh. 5 - Prob. 21SPCh. 5 - Prob. 22SPCh. 5 - Prob. 23SPCh. 5 - Prob. 24SPCh. 5 - (Solving for PMT of an annuity) To pay for your...Ch. 5 - Prob. 26SPCh. 5 - Prob. 27SPCh. 5 - (Loan amortization) On December 31, Beth Klemkosky...Ch. 5 - (Solving for r of an annuity) You lend a friend...Ch. 5 - Prob. 30SPCh. 5 - (Compound annuity) You plan on buying some...Ch. 5 - (Loan amortization) On December 31, Son-Nan Chen...Ch. 5 - (Loan amortization) To buy a new house you must...Ch. 5 - Prob. 34SPCh. 5 - Prob. 35SPCh. 5 - Prob. 36SPCh. 5 - Prob. 37SPCh. 5 - Prob. 38SPCh. 5 - (Compound interest uith nonannnal periods) a....Ch. 5 - (Compound interest with nonannual periods) After...Ch. 5 - Prob. 41SPCh. 5 - (Spreadsheet problem) To buy a new house you take...Ch. 5 - (Nonannual compounding using a calculator) Jesse...Ch. 5 - (Nonannual compounding using a calculator)...Ch. 5 - (Nonannual compounding using a calculator) Fords...Ch. 5 - Prob. 46SPCh. 5 - (Nonannual compounding using a calculator) Dennis...Ch. 5 - Prob. 48SPCh. 5 - (Calculating the effective annual rate) Youve just...Ch. 5 - Prob. 50SPCh. 5 - Prob. 51SPCh. 5 - (Present value) The Kumar Corporation is planning...Ch. 5 - (Perpetuities) What is the present value of the...Ch. 5 - (Complex present value) How much do you have to...Ch. 5 - (Complex present value) You would like to have...Ch. 5 - Prob. 56SPCh. 5 - Prob. 57SPCh. 5 - Prob. 58SPCh. 5 - Prob. 59SPCh. 5 - (Present value of a complex stream) Don Draper has...Ch. 5 - (Present value of a complex stream) Don Draper has...Ch. 5 - (Complex stream of cash flows) Roger Sterling has...Ch. 5 - (Future and present value using a calculator) In...Ch. 5 - Prob. 1MCCh. 5 - Prob. 2MCCh. 5 - Prob. 3MCCh. 5 - Prob. 4MCCh. 5 - Prob. 5MCCh. 5 - Prob. 6MCCh. 5 - Prob. 7MCCh. 5 - Prob. 8MCCh. 5 - Prob. 9MCCh. 5 - Prob. 10MCCh. 5 - Prob. 11MC
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- 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?arrow_forwardUse the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?arrow_forwardLeslie Mosallam, who recently sold her Porsche, placed $10,000 in a savings account paying annual com- pound interest of 6 percent. a. Calculate the amount of money that will accumulate if Leslie leaves the money in the bank for 1, 5, and 15 years. b. Suppose Leslie moves her money into an account that pays 8 percent or one that pays 10 percent. Rework part a using 8 percent and 10 percent. c. What conclusions can you draw about the relationship among interest rates, time, and future sums from the calculations you just did? use EXCEL to work this out and show the formula!arrow_forward
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