Question

# 1. If you deposit \$1600 into an account paying 8% compounded monthly, how much will you...

1. If you deposit \$1600 into an account paying 8% compounded monthly, how much will you have in 4 years?

2. if you deposit \$1600 in an account paying 8% today and deposit \$1600 every year into the account, how much will you have in 4 years?

3. The average price for a new car today is \$29000. If the rate of inflation is expected to be 3.5% annually, what will a new car cost in 7 years?

4. You bought a stock 7 years ago for \$45. Today, the stock is selling for \$79. if you sell today, what rate of return have you earned on the stock?

5. How long would it take for a deposit of \$1200 to become \$16000 if you can earn 9.5% on your money?

6. A risk- free investment promises to pay you \$650 every 6 months for the next 11 years. If you can earn 9.5% on your money, how much would you be willing to pay for the investment?

1.

Amount accumulated after 4 years can be computed with help of below formula- where,

A = Future amount (ending amount)

P = Initial amount

R = rate of interest

n = no. of compounding

t = No. of years.

Here,

P = \$1600

R = 8 %

n = 12 (as monthly compounded)

t = 4 years   A = 1600 * 1.37566612229868

A = 2201.065796

Amount accumulated after 4 years = \$2201.07 \$ (approx)

Hope it helps!

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