4A. How much will be accumulated in a fund, eaming 4% interest, if $4,000 is deposited...

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Answer 1

Answer #1


4A
Rate	Interest Rate	4%
Nper	Number of annual deposit	3
Pmt	Amount of annual deposit	$4,000
FV	Accumulated amount at end of 3 years	$12,486.40	(Using FV function of excel with Rate=4%,Nper=3,Pmt=-4000)

4B	Single Payment Compound Amount Factor:
	SPCAF=(F/P,i,N)=(1+i)^N
	N=Number of years=17
	Assume , you invest $1
	In 17 years it grows to $3
	3=1*SPCAF=(1+i)^17
	1+i=3^(1/17)=	1.066758117
	Required interest rate =i=0.06675812
	Annual Interest Rate=6.68%

Answer 2

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