Question

General Instructions Answer all 4 problems Show ALL work to earn any partial credit / indicate notation if you use Interest Tables Please write neatly Circle your final answers 1. For an interest rate of 13% compounded annually, find: a) How much can be lent now if $10,000 will be repaid at the end of 5 years b) How much will be required in 4 years to repay a $25,000 loan received now? 2 If $1500 is invested now, $1,800 two year from now, and $2,000 four years from now at an interest rate of 6% compounded annually, what will be the total amount in 15 years? Show all work

Answer 1

A=P(1+r/n)n*t

A = total amount

P = principal or amount of money deposited

r = annual interest rate

n = number of times compounded per year

t = time in years

1. $10,000=P(1+.13)5

Ans: 10,000/1.8424= $5428.88

2. A=25000(1+0.13)1*4

= 25000*1.630474= $40761.85 & Interest Amount =$15,761.85

2. A ={1500(1+0.06)15}+{1800(1+.06)13}+{2000(1+.06)11}

A=3594.84+3839.27+3796.6 = $11,230.71