Homework Answers
Please find below the answer.. ..
| a) | Computation of future value after 1 year | ||||
| Present value | 5000 | ||||
| Rate | 7% | ||||
| year | 1 | ||||
| future value = | =5000*(1+7%) | ||||
| future value = | 5350.00 | ||||
| b) | Computation of future value after 1 year | ||||
| Present value | 5000 | ||||
| Rate | 7% | ||||
| year | 22 | ||||
| future value = | =5000*(1+7%)^22 | ||||
| future value = | 22152.01 | ||||
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For EACH of the following cases in the following table: a. Calculate the future value at...
For
EACH of the following cases in the following table:
a. Calculate the future value at the end of the specified
deposit period.
b. Determine the effective annual rate, EAR.
c. Compare the nominal annual rate, r, to the effective annual
rate, EAR. What relationship exists between compounding frequency
and the nominal and effective annual rates?
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If you deposit $3,600 today into an account earning a(n) 8 percent annual rate of return, what will your account be worth in 40 years (assuming no further deposits)? In 50 years? Click on the table icon to view the FVIF table In 40 years, your account will be worth (Round to the nearest cent.)
Continuous compounding For the case in the following table, find the future value at the end of the deposit period, assuming that interest is compounded continuously at the given nominal annual rate. (Click on the icon here in order to copy the contents of the data table below into a spreadsheet.) Amount of initial deposit $2,600 Nominal annual rate, r 8% Deposit period (years), n 11 The future value at the end of the deposit period is $ . (Round...
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(Related to Checkpoint 5.2) (Future value) If you deposit $3,500 today into an account earning an annual rate of return of 11 percent, what would your account be worth in 35 years (assuming no further deposits)? In 40 years? a. If you deposit $3,500 today into an account earning an annual rate of return of 11 percent, what would your account be worth in 35 years? $ (Round to the nearest cent.)
(Related to Checkpoint 5.2) (Future value) If you deposit $2,700 today into an account earning an annual rate of return of 9 percent, what would your account be worth in 25 years (assuming no further deposits)? In 30 years? a. If you deposit $2,700 today into an account earning an annual rate of return of 9 percent, what would your account be worth in 25 years? (Round to the nearest cent.)
For
EACH of the following cases in the following table:
a. Calculate the future value at the end of the specified
deposit period.
b. Determine the effective annual rate, EAR.
c. Compare the nominal annual rate, r, to the effective annual
rate, EAR. What relationship exists between compounding frequency
and the nominal and effective annual rates?
Compounding frequency, Deposit period (times/year) (years) Nominal annual rate, Case 7% Amount of initial deposit $2,400 $48,000 $900 $20,000 11% 6% 17% Print Done...
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