Question

I really do not understand this... please help with explanations. thank you so much in advance!

Paragraph stalled, but first we need to close some apps. Update now 1. All other things equal, how will the following impact the future value: a) increase in the present value, b) decrease in the interest rate, c) increase in the number of time periods. 3 points 2. All other things equal, how will the following impact the present value: a) increase in the future value, b) increase in the interest rate, c) increase in the number of time periods. 3 points 3 Would you rather have a loan that requires 10% interest compounded annually or compounded monthly? Explain your answer. 3 points 4. Sam received an inheritance of $15,000 from his grandparents that he deposited into an account earning 5% compounded annually. How much will he have in the account 5 years from now if he does not withdraw any of the principal or interest? 20 years? Next assume that the account compounds interest semiannually. How much will he have in the account in 5 years? 20 years? S points John currently has $50,000 in his retirement accounts. He would like to have $500,000 before he retires 10 years from now. He estimates that he can earn an average of 8% on the account. How much additional money should he save each year to reach this goal? 3 points 6. If you deposit money in an account today that pays 7% interest annually, how long will it take to double your money? 3 points 7. Lauren plans to purchase a car and has determined that her budget will allow for a payment of $375 per month for the principal and interest. The bank has told her the interest rate for either a 3-year (36 month) or a 4-year (48 month) loan would be 6.5% How much can she afford to borrow under either term? 4 points 8 an purchases a car for $23.000 using a 4-year (48 month) loan with a 7% interest rate compounded monthly. What is Jan's monthly payment for principal and interest? What is the loan's effective annual rate? Of the first payment, how much will be paid in in interest and how much will be applied to principal? 7 points 9. Joel used his credit card with a 22% interest rate to purchase a smartphone for $425. The minimum payment on the card is only $12 per month of Joel only makes the minimum payment, how long will it take to pay off the card? If Joel makes a monthly payment of $40, how long will it take to pay off the card? How much more in total payments will he make with the minimum payment versus the $40 per month payment? 8 points 10. Jack and Jill have both started new jobs after graduating from college at age 22. They both plan to retire at age 62 l begins saving for retirement during her first year by putting 54.000 per year in a retirement account Jack waits for 10 years to begin saving for retirement. They each expect to earn an average annual return of How much will each have in their retirement accounts when they retire? If they expect to live for 25 years after retirement, how large of an annual annuity may each withdraw from the account if they would like an equal payment during each year of retirement and would like to use all of the retirement savings for this purpose? They estimate they will continue to earn during retirement 8 points and will miss ARAG Bruch

Answer 1

1]

Future value = present value * (1 + interest rate per period)^{number of periods}

Given this formula, we conclude that :

a]

An increase in present value results in a higher future value

b]

A decease in interest rate results in a lower future value

c]

An increase the number of time periods results in a higher future value