Question

1. David's liquidity ratio is 4.0. He has $ 1,000 in current liabilities and therefore in liquid assets.

2. If you invest $ 12,000 today at an interest rate of 10%, how much money will you have in 10 years?

3. Antonio invests $ 10,000 in a savings certificate at the BPPR. He receives an annual interest of 8% for 7 years. How much interest will he earn on that investment?

Answer 1

1. We know,

.

2. Compound interest formula:

Where,
A = Amount at the end of the year n
P = Principal amount invested
i = rate of interest
n = number of years

Therefore,

.

3. Interest earned = Amount invested * Rate of interest * Number of years

= $10,000 * 8% * 7

= $800.00 * 7

= $5,600.00