Question

6.  What will $150,000 grow to be in 15 years if it is invested in an account with a quoted annual interest rate of 10% with monthly compounding of interest?

7.  How many years will it take for $200,000 to grow to be $600,000 if it is invested in an account with a quoted annual interest rate of 8% with monthly compounding of interest?

8.  At what quoted annual interest rate must $135,000 be invested so that it will grow to be $460,000 in 15 years if interested is compounded weekly?

9.  If you wish to accumulate $500,000 in 20 years, how much must you deposit today in an account that pays a quarterly interest rate of 2%?

10. How many months will it take for $200,000 to grow to be $550,000 if it is invested in an account with a quoted annual interest rate of 8% with monthly compounding of interest?

Answer 1

6

EAR = [(1 +stated rate/no. of compounding periods) ^no. of compounding periods - 1]* 100

Effective Annual Rate = ((1+10/12*100)^12-1)*100

Effective Annual Rate% = 10.47

Future value = present value*(1+ rate)^time

Future value = 150000*(1+0.104713067441297)^15

Future value = 668087.93

7

EAR = [(1 +stated rate/no. of compounding periods) ^no. of compounding periods - 1]* 100

Effective Annual Rate = ((1+8/12*100)^12-1)*100

Effective Annual Rate% = 8.3

Future value = present value*(1+ rate)^time

600000 = 200000*(1+0.08299950680751)^Time

Time(in years) = 13.78

Please ask remaining parts separately, questions are unrelated. I have done one bonus