Question

Chrome File Edit View History Bookmarks People Tab Window Help 99% [ Tue 12:08:23 PM Q E ... #1+2 (p. 93) x CSePub - Electronic Publishing x + E → C csepub.com/exercise/users/problem sets/30687 ☆ Paused O #2 Suppose you need to have $59,386.00 in an account 24.00 years from today and that the account pays 14.00%. How much do you have to deposit into the account 14.00 years from today? unanswered Submit not submitted Attempts Remaining: Infinity Answer format: Currency: Round to: 2 decimal places. Suppose you deposit $1,142.00 into an account 4.00 years from today. Exactly 17.00 years from today the account is worth $1,571.00. What was the account's interest rate? unanswered Submit not submitted Attempts Remaining: Infinity Answer format: Percentage Round to: 3 decimal places (Example: 9.243%, % sign required. Will accept decimal format rounded to 5 decimal places (ex: 0.09243) Suppose you deposit $1,001,00 into an account 6.00 years from today that earns 11.00%. It will be worth $1,814.00 years from today. Unanswered Submit not submitted Attempts Remaining: Infinity Answer format: Number: Round to: 2 decimal places. Assure the real rate of interest is 2.00% and the inflation rate is 5.00%. What is the value today of receiving 10,184.00 in 9.00 years? unanswered Submit not submitted Attempts Remaining: Infinity Answer format: Currency: Round fo: 2 decimal places Points: 0/5 Grade: % Progress: 0 % Hide

Answer 1

Compound Amount Factor (CAF)=(F/P,i,N)=(1+i)^N

i=Annual Interest Rate , N=Number of Years

Future Value (F)=CAF*Present Value(P)

A.Future Value=F=$59386

N=Number of years =(24-14)=10

I=Interest Rate =14%=0.14

CAF=(F/P,14%,10)=(1+0.14)^10=3.707221

Present Value =P=F/3.707221=59386/3.707221=$16,019.01

Amount need to deposit=$16,019.01

3.

Present Value=P=$1142

Future Value =F=$1571

N=Number of years =(17-4)=13

1571=1142*CAF

CAF=1571/1142=1.375657

(1+i)^13=1.375657

1+i=1.375657^(1/13)=1.02484

Interest Rate =i=1.02484-1=0.02484

Interest Rate =2.484%

4Future Value =F=$1814.00

Present Value=$1001.00

i=Interest Rate=11%=0.11

CAE=1814/1001=1.812188

CAF=(1+0.11)^N

(1.11^N)=1.812188

N Log 1.11=Log 1.812188

N=Number of Years =Log1.812188/Log1.11=5.7

ANSWER:

6+5.7=11.7 Years

#5

Real interest rate=2%=0.02

Inflation =5%=0.05

Nominal Interest rate =i

1+i =(1+0.02)*(1+0.05)=1.071

Nominal interest rate =1.071-1=0.071=7.1%

Number of years=N=9

CAE=(1+0.071)^9=1.853981

Future Value=F=$10164

Present Vaue P=F/1.853981=10164/1.853981=$5,482.26