Question

20

If you invest $14,500 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 12 years at 10 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
  

b. In 17 years at 6 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
  

c. In 25 years at 6 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
  

d. In 20 years at 6 percent (compounded semiannually)? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
  

Answer 1

a.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=$14500*(1.1)^12

=$14500*3.138428377

=$45507.21(Approx).

b.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=$14500*(1.06)^17

=$14500*2.692772786

=$39045.21(Approx).

c.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=$14500*(1.06)^25

=$14500*4.29187072

=$62232.13(Approx).

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

A=$14500*(1+0.06/2)^(2*20)

=$14500*3.262037792

=$47299.55(Approx).