Question

A young man is the beneficiary of a trust fund established for him 21 yr ago at his birth. If the original amount placed in trust was $50,000, how much will he receive if the money has earned interest at the rate of 10%/year compounded annually? Compounded quarterly? Compounded monthly? (Round your answers to the nearest cent.) compounded annually $ compounded quarterly $ compounded monthly $ Need Help? Read Talk to a Tutor MY NOTES PRACTICE ANOTHER 4. [-/0.1 Points] DETAILS TANAPMATHS 4.1.056. Anthony invested a sum of money 8 yr ago in a savings account that has since paid interest at the rate of 8%/year compounded quarterly. His investment is now worth $9,422.70. How much did he originally invest? $ Need Help? Read Talk to her

Answer 1

Ques-1)

Original Invested AMount = $50,000

calculating the Future Value under following different scenarios:-

a). Compounded annually

FutureValue = Invested Amount(1 + —)n*m m

r = Periodic Interest rate = 10%

n= no of periods =21

m = no of times compounding in a year = 1

$Future Value = 50,000(1+\frac{0.10}{1})^{21*1}$

Future value = $370,012.50

Amount to be Realised in compounded annually = $370,012.50

b). Compounded Quarterly

FutureValue = Invested Amount(1 + —)n*m m

r = Periodic Interest rate = 10%

n= no of periods =21

m = no of times compounding in a year = 4

$Future Value = 50,000(1+\frac{0.10}{4})^{21*4}$

Future value = $397,900.69

Amount to be Realised in compounded Quarterly = $397,900.69

c). Compounded Monthly

FutureValue = Invested Amount(1 + —)n*m m

r = Periodic Interest rate = 10%

n= no of periods =21

m = no of times compounding in a year = 12

$Future Value = 50,000(1+\frac{0.10}{12})^{21*12}$

Future value = $404,770.93

Amount to be Realised in compounded Monthly= $404,770.93

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