Question

uppose 20 years ago your mother deposited $ 2,500 in an account earning 12%. After 10 years she withdrew $1,000. Obtain today s value. $21.009.88 $22,037.26 $23,115.73 $24,115.73 0/10 pts Question 5 Assume an investment of $10,000 over a ten-year period. Which of the following would yield the highest total amount at the end of the ten-year period? 11% simple interest for the entire period. 7.5% interest compounded annually for the first five years and then simple interest for the remaining five years. 10% simple interest for the first five years and then 7.5% annually compounded interest for the remaining five years 8.0% interest compounded annual for the entire period.

Answer 1

Answer 4 : $21009.88

Calculated as

Amount after 10 years = $2500 x (1+12%)^10 = 7764.62

Amount after 1000 withdrawn = $7764.62-$1000 = $6764.62

Amount after another 10 years = $6764.62 x (1+12%)^10 = $21009.88

Answer 5 : 8.0% interest compounded annual for the entire period

Calculated

first option

Amount will be = $10000+$10000 x 11% x 10 = $21000

Second option

Amount after five years = $10000 x (1+7.5%)^5 = $14356.29

Simple interest for next five years = $14536.29 x 7.5% x 5 = $5383.61

Amount after 10 years will be = $14356.29+$5383.61 = $19739.90

Third option

Amount after five years = $10000+$10000 x10% x 5 = $15000

Amount after another 5 years = $15000 x (1+7.5%)^5 = $21534.44

Fourth option

Amount after 10 years = $10000 x (1+8%)^10 = $21589.25

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