Question

1. What is finance and why do we need to study finance?

2. What is the future value of $63,274 if invested at 8% for 20 years compounded annually?

3. Calculate the daily, monthly, and quarterly interest rate for 7%.

Answer 1

1.Finance involves the monetary transactions, assets , liabilities,income expenses ,cash fllows which help in making decision making and budgeting decision. We need to study finance to underatnd commercial viability of projects, to understand time value of money, debt transactions, equity and shares issues in companies. It helps in undertsanding the macroeconomic factors efefcting a country or comapny too. It brings sense to the uncertainity in
stock market.

2. Future Value = Present Value * ( 1 + interest rate )^t = 63,274 * ( 1+8%)²⁰ = 294,917.402

3. Daily interest rate = 7%/365 = 0.0192%
Monthly interest rate = 7%/12 = 0.583%
Quarterly Interest rate = 7%/4 = 1.75%


Best of Luck. God Bless