Question

i need asnwers for HP calc

1. Simple Interest versus Compound Interest. First City Bank pays 6 percent simple interest on its savings account balances, whereas Second City Bank pays 6 percent interest compounded annually. If you made a deposit of $8,100 in each bank, how much more money would you earn from your Second City Bank account at the end of 10 years? 2. Calculating Future Values. For each of the following, compute the future value: Present Value Years Interest Rate Future Value 13% $ 3,150 8,453 89,305 227,382 26 3. Calculating Present Values. For each of the following, compute the present value: Present Value Years Interest Rate Future Value 15 8 7% 11 $ 17,328 41,517 790,382 647,816 13 25

Answer 1

1. Extra money would earn from second city bank

Step 1: Simple Interest on $8100 @6% for 10 year

= P*R*T

=$8100*6%*10

= $4860

Step 2: Compound interest on $8100 @6% for 10 year

= $P\{\left ( 1+i \right )^{n}-1\}$ or you can use the formula of FV in excel

= $\$8100\{\left ( 1+.06 \right )^{10}-1\}$

=$\$6405$

Step 3: Step 2- Step 1

Extra money would earn from second city bank

=$6405-$4860

= $1545

2. Calculation of future value

Here use the formula Future Value (FV) in excel

$=FV(rate,nper,pmt,-pv)$

Present Value	Years (nper)	Interest Rate	Future value
$3,150	7	13%	$7,410.71
$8,453	16	7%	$24,954.64
$89,305	19	9%	$459,176.06
$227,382	26	5%	$808,495.97

3. Calculation of Present Value

$=PV(rate,nper,pmt,-fv)$

Present Value	Years (nper)	Interest Rate	Future value
$6,280	15	7%	$17,328
$18,015	8	11%	$41,517
$228,946	13	10%	$790,382
$30,513	25	13%	$647,816

I hope this clear your doubt.

Feel free to comment if you still have any query or need something else. I'll help asap.

Do give Thumbs up if you find this helpful.