4. (8 points) Precision Engineering invested $120,000 at 5 % interest, compounded annually for 4 years....

Question

Question

Answer 1

Answer #1

Future Value = Present Value (1+r)ⁿ

a)

Future Value = $120000*(1+0.05)^4

Future Value = $145,860.75

b)

Interest = Amount Received at the end - Principal

Interest = $145,860.75-$120,000

Interest = $25,860.75

c)

Simple Interest = $120000*0.05*4

Simple Interest = $24,000

d)

Interest on Interest = $25,860.75-$24,000 = $1,860.75

Answer 2

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