1.)Suppose an account earns a 13% simple rate of interest annually. a. The future value of...
1.)Suppose an account earns a 13% simple rate of interest annually.
a. The future value of an annual deposit of $21 at the end of each year for four years will be
b.The future value of an annual deposit of $21 at the beginning of each year for four years will be
Round your final answer to two decimal places.
2.) If the simple rate of interest is 6%, the interest earned by $1 in 5 years is:$_________
3.) What is the future value of $12 deposited today in 5 years when earning 6% simple rate of interest?
4.)Deposits of $13 are made to an account each year for 31 years. If k=9% (simple rate of interest) per year, how much will be in the account at the end of 50 years? Round your final answer to two decimal places.
Homework Answers
![1-a) This can be solved using the Future value of annuity formula Future value of annuity is P*((1+1)/n-1)/r Pis Annual Deposit = $ 21 r is Rate of Interest-13% n is No of years -4 Future value of annuity is = 214(1+0.13)4-1yo.13 Future value of annuity is 210.63047361/0.13) Future value of annuity is 21*4.849797 Future value of annuity is - S 101.85/. Approx. 1-b) This can be solved using the Future value of annuity due formula Future value of annuity due is1)P(1+r)n-1)/1) P is Annual Deposit S 21 r is Rate of Interest 13% n is No of vears = 4 Future value of annuity due is (1-0.13) T211-0.13) 4-1)/0.13] Future value of annuity due is (1+0.13) 101.845737 Future value of annuity due is S 115.09/. Approx. 2) Interest earned by $1 fpr 5 years = (1+5%+5)= $ 0.25 ) Future value of annuity due is 1)P((1-r)n-1)/r] P is Annual Deposit -S12 r is Rate of Interest = 6% n is No of vears =- Future value of annuity due is-(10.06) [1210.06)A5-1)/0.06] Future value of annuity due is(1 0.06) 12 5.63709296] Future value of annuity due is (1+0.06)-67.64511552 Future value of annuity due is - S 71.70/. Approx. 4) First we will find the Future value as of 31 vears Future value of annuity is P (1)n-1)/r P is Annual Deposit S 13 r is Rate of Interest-9% n is No of vears-31 Future value of annuity is 13 1+0.09)31-1)/0.09 Future value of annuity is 13 149.575217 Future value of annuity is S1,944.48/. Approx, The above future value is to be used for finding the Future value as of 50 years Balance time period in years - 19 Future value-Present value (1+r)n Future value (1944.48 (1+0.09)*19) Future value (1944.48 5.141661255) Future value-S 9,997.85/. Approx It will be $ 9,997.85/. in the account at the end of 50 years](http://img.homeworklib.com/questions/7efa2940-7026-11ea-ae1a-fb17150c315d.png?x-oss-process=image/resize,w_560)
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