Question

Intro You make a one-time investment of $600 and leave it for 5 years, earning an annual interest rate of 9%. B Attempt 1/10 for 8 pts. Part 1 How much interest will you have earned after 5 years? No decimals Submit B Attempt 1/10 for 8 pts. Part 2 If you leave the eitire amount in your account for another 5 years and earn the same interest rate, how much interest will you earn over the second 5-year period? No decimals Submit

Answer 1

Answer to Q#1 (First question in the list) Part-1 Part-2 996 Annual Interest rate, RATE # of years of deposit, NPER Annual deposits, PMT Lumsum amount invested, PV Interest compounding type, TYPE Future Value Less: Initial investment Total interest earned Less: Interest earned during first 5 years Interest earned during next 5 years 996 10 [For Part-2, initial 5 years+Next 5 years 10 years totally] SO $0 $600 0 $600 0-0 if compounded at the end of each year; 1 if compounded at the beginning of each year $923 1,420 [Ref: NOTE $600 $600 $323 [As calculated in Part-1] $A97

NOTE Future value is calculated using EXCEL FUNCTION FV(rate, nper,pmt,pv,type) where rate-9%; nper=5 (for Part-1) or 10 (for Part-2); pmt-o pv-600; Here value for pv is negative as it denotes cash inflow; type-0 as interest is compounded at the end of each year only Part-1 996 Part-2 2 Annual Interest rate, RATE 3 996 10 (For Part-2, initial 5 years+Next 5 years 10 years totally $0 # of years of deposit, NPER $0 Annual deposits, PMT 5 Lumsum amount invested, PV 6 Interest compounding type, TYPE 7 Future Value 8 Less: Initial investment 9 Total interest earned 10 Less: Interest earned during first 5 years 11 Interest earned during next 5 years 0E0 if compounded at the end of each year; 1 if compounded at the beginning of each year :FV(B2,B3,B4,-B5B6) $600.00 -B7-B8 FV(C2,C3,C4,-C5,C6) [Ref: NOTE $600.00 -C7-C8 -B9 [As calculated in Part-1] -C9-C10