Question

answer the problem solving under investment management?

Problem 9

Find the future value of a 4-year annuity due of $400 at 6%.

The answer is:  

Problem 10

Calculate simple interest and compound interest assuming that principal amount is. 10,000; interest rate is 9% for three years. What is the amount different between compound and simple interest?

The answer is:

Problem 11

You are scheduled to receive 13,000 in two years. When you receive it, you will invest it for six more years at 8 percent per year. How much will you have in eight years?

The answer is:

Problem 12

You have 9,000 to deposit. ABC Bank offers 12 percent per year compounded monthly, while King Bank offers 12 percent but will only compound annually. How much will your investment be worth in 10 years at each bank?

The answer is:

Answer 1

Problem 9.

Annuity (A) = $400

No. of years (n) = 4 years

Interest rate (r) = 6% or 0.06

Solution :-

Future value of annuity due

= A/r x [(1 + r)ⁿ - 1] x (1 + r)

= $400/0.06 x [(1 + 0.06)⁴ - 1] x (1 + 0.06)

= $400/0.06 x [(1.06)⁴ - 1] x (1.06)

= $400/0.06 x [1.26247696 - 1] x (1.06)

= $400/0.06 x 0.26247696 x 1.06

= $1854.84