Question

1. Chris Spear invested $50,000 today in a fund that earns 8% compounded semiannually. To what amount will the investment grow in 3 years?

2. Sally Medavoy will invest $10,000 a year for 3 years in a fund that will earn 6% annual interest. If the first payment into the fund occurs today, what amount will be in the fund in 3 years?

3. John Fillmore's lifelong dream is to own his own fishing boat to use in his retirement. John has recently come into an inheritance of $500,000. He estimates that the boat he wants will cost $400,000 when he retires in 5 years. How much of his inheritance must he invest at an annual rate of 10% (compounded annually) to buy the boat at retirement?

4. Kehoe, Inc. owes $30,000 to Ritter Company today. How much would Kehoe have to pay each year if the debt is retired through four equal payments (made at the end of the year), given an interest rate on the debt of 12%?

5. On January 15, 2010, Dolan Corp. adopted a plan to accumulate funds for environmental improvements beginning July 1, 2014, at an estimated cost of $5,000,000. Dolan plans to make four equal annual deposits in a fund that will earn interest at 8% compounded annually. The first deposit was made on July 1, 2010. Dolan should make four annual deposits of ?

Answer #1

Answer to Question 1:

Amount Invested = $50,000

Annual Interest Rate = 8.00%

Semiannual Interest Rate = 4.00%

Time Period = 3 years

Semiannual Period = 6

Accumulated Sum = Amount Invested * (1 + Semiannual Interest
Rate)^Semiannual Period

Accumulated Sum = $50,000 * 1.04^6

Accumulated Sum = $50,000 * 1.265319

Accumulated Sum = $63,265.95

Answer to Question 2:

Annual Deposit = $10,000

Time Period = 3 years

Interest Rate = 6%

Accumulated Sum = $10,000*1.06^3 + $10,000*1.06^2 +
$10,000*1.06

Accumulated Sum = $10,000 * 1.06 * (1.06^3 - 1) / 0.06

Accumulated Sum = $10,000 * 3.374616

Accumulated Sum = $33,746.16

Ten thousand dollars is deposited into a fund today. The fund
earns 8% compounded annually. One year from now $20,000 will be
deposited to the fund. If the funds are withdrawn in 5 equal annual
amounts starting 2 years from now, how much will each withdrawal
be?

1- Serena Willis will invest $27,700 today. She needs $42,972 in
9 years.
What annual interest rate must she earn?
2- Gary Bautista needs $27,000 in 3 years.
What amount must he invest today if his investment earns 12%
compounded annually? What amount must he invest if his investment
earns 12% annual interest compounded quarterly? (Round
factor values to 5 decimal places, e.g. 1.25124 and final answers
to 0 decimal places, e.g. 458,581.)
Investment at 12% annual interest, compounded quarterly...

On January 15, 2017, Everett Corp. adopted a plan to accumulate
funds for environmental improvements beginning July 1, 2021, at an
estimated cost of $8,000,000. Everett plans to make four equal
annual deposits in a fund that will earn interest at 10% compounded
annually. The first deposit was made on July 1, 2017.
Dolan should make four annual deposits of $______________
(Please show steps)

Evans invested $50,000 today in a mutual fund earning 5%
interest, compounded annually.
Round your answer to the nearest whole number (for example,
enter 51 for 50.5555).
Do not use negative signs with any of your answers.
a.
What is the value of the mutual fund in 5 years?
Answer
b.
What is the value of the mutual fund in 20 years?
Answer

Intermediate
1. Multiple compounding periods: Find the future value of an
investment of $2,500 made today for the following rates and
periods:
a.
6.25 percent compounded semiannually for 12 years
b.
7.63 percent compounded quarterly for 6 years
c.
8.9 percent compounded monthly for 10 years
d.
10 percent compounded daily for 3 years
2. Multiple compounding periods: Find the present value of
$3,500 under each of the following rates and periods.
a.
8.9% compounded monthly for five years.
b. ...

Jose deposits $800 annually into a Teacher Credit Union for
retirement that earns 3.25% compounded annually. Ignore the tax.
Due to the change in employment, these deposits stop after 15
years, but the account continues to earn interest until he retires
20 more years from the end of the 15th year. How much is
in the account when he retires?

Joseph deposits $350. Into a retirement fund every month at 3%
nominal interest, compounded monthly, for 8 years.
How much will he have in the fund when he is finished making
deposits?

Starling wants to retire with $2,010,000 in his retirement
account exactly 31 years from today. He will make annual deposits
at the end of each year to fund his retirement account. If he can
earn 9.33 percent per year, how much must he deposit each year?

Newman Hitchcock is 38 years old today and he wishes to
accumulate $501,000 by his 61st birthday so he can retire to his
summer place on Lake Hopatcong. He wishes to accumulate this amount
by making equal deposits on his 38th through his 60th birthdays.
What annual deposit must Newman make if the fund will earn 8%
interest compounded annually? (Round factor values to 5
decimal places, e.g. 1.25124 and final answer to 0 decimal places,
e.g. 458,581.)

1- Henry Newman will invest $10,580 today in a fund that earns
6% annual interest.
How many years will it take for the fund to grow to
$18,947?
2- Donald Jackson invests $58,800 at 10% annual interest,
leaving the money invested without withdrawing any of the interest
for 10 years. At the end of the 10 years, Donald withdraws the
accumulated amount of money.
Compute the amount Donald would withdraw assuming the
investment earns interest compounded semiannually.

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