Question

If you invest $9,000 today, how much will you have in each of the following instances? Use Appendix A as an approximate answer, but calculate your final answer using the formula and financial calculator methods.

a. In 2 years at 9 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
  

b. In 7 years at 12 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
  

c. In 25 years at 14 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
  

d. In 25 years at 14 percent (compounded semiannually)? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
  

Answer 1

1.We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

A=$9000*(1.09)^2

=9000*1.1881

=$10692.90

2.We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

A=$9000*(1.12)^7

=$9000*2.210681407

=$19896.13

3.We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

A=$9000*(1.14)^25

=$9000*26.46191581

=$238,157.24

4.We use the formula:
A=P(1+r/200)^2n
where
A=future value
P=present value
r=rate of interest
n=time period.

A=$9000(1+0.14/2)^(2*25)(

=$9000*29.45702506

=$265,113.23(Approx).