Question

1. Penny received an unexpected $5,000.00 gift from a distant relative. She invests it in a...

1. Penny received an unexpected $5,000.00 gift from a distant relative. She invests it in a mutual fund that increases the value of the original investment by 8% each year. You must show all calculations to earn credit. How much will her original investment be worth in 10 years?

2. In 15 years, Penny hopes to have $40,000 available to make a down payment on a house. How much would she need to invest right now in a mutual fund that earns 8% annual interest in order to have enough for her down payment in 15 years?

3. Stuart's 1st six grades for his biology class this semester are 62, 75, 85, 95, 98, 100 Write a persuasive argument for or against using the median to computer your grade for a class, rather than the mean. answers to all part will really help a lot

Homework Answers

Answer #1

1.The future worth of the investment is,

FW = P(1 + i)n

      =5,000(1 + 0.08)10

      = 5,000 * 2.1589

     = $10.794.5

Thus, her original investment be worth $10.794.5 in 10 year.

2.The present worth of the required amount is,

PW = F / (1 + i)n

      =40,000 / (1 + 0.08)15

      = 40,000 / 3.1722

     = $12,609.5

Thus, she need to invest $12,609.5 right now in a mutual fund.

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