Question

Your birthday is coming up and instead of other presents, your parents promised to give you $2,900 in cash. Since you have a part-time job and, thus, don’t need the cash immediately, you decide to invest the money in a bank CD that pays an annual rate of 8.20 percent, compounded quarterly, for the next two years. How much money can you expect to earn in this period of time? (If you solve this problem with algebra round intermediate calculations to 4 decimal places, in all cases round your final answer to the nearest penny.) Value of investment after 2 years $

Answer #1

Sol:

Present value (PV) = $2,900

Interest rate = 8.20%, Compounded Quarterly = 8.20%/4 = 2.05%

Period = 2 years, Quarterly = 2 x 4 = 8

To determine the amount of money can you expect to earn in this period of time we can use FV function in exel sheet:

PV | -2900 |

Interest rate | 2.05% |

Period | 8 |

Future value | $3,411.16 |

**Therefore the amount of money can you expect to earn in
this period of time will be $3,411.16.**

We can also use the following formula to determine future value:

FV= PV x (1+r)^n

FV= 2900 x (1+2.05%)^8

FV= 2900 x (1.0205)^8

**FV= 2900 x 1.176262 = $3,411.16**

**Excel sheet
working:**

PLEASE ANSWER ALL, I am unable to post individually.
Do NOT answer, If you are not going to complete all, and or request
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PLEASE ANSWER ALL, I am unable to post individually.
Dont not answer, and request to post the remaining separately.
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