Question

Question 1 2 pts What is the present value of $100 ten years from now if the simple rate of interest is0.25? Round your final answer to two decimal places. Question 2 2 pts A deposit of $11 is made at the beginning of each year for 17 years, what is the future value of all deposits if simple rate of interest is 0.11? Round your final answer to two decimal places. Question 3 2 pts In how many years will $100 become $320 if simple rate of interest is 11%? 20

Answer 1

Question 1

Amount = $ 100

Simple interest rate = 0.25

Time = 10 years

Present value = Amount / ((1+r)^n)

=$ 100 / ((1.25) ^ 10)

= $ 10.74

Question 2

Question 3

Present value = $ 100

Maturity value = $ 320

Time = ?

Rate of interest = 11%

Formula used = Interest = Maturity value – Present value

And Interest = Present value * Time * Rate

Therefore, Interest = 320-100 = $ 220

Time = Interest / ( present value * Rate of interest)

Time = 220 / ( 100*0.11)

Time = 20 years