Ch4 finance

What is the future value of $800 deposited for one year earning an 10 percent interest rate annually?

Future value $ 880 correct

Approximately how many years are needed to double a $500 investment when interest rates are 10.75 percent per year?

Period 6.70 years N = 72 / 10.75 ≈ 6.70 years

Approximately how many years are needed to double a $100 investment when interest rates are 6.00 percent per year? (Round your answer to 2 decimal places.)

Period 12.00 correct years

What would be more valuable, receiving $700 today or receiving $775 in three years if interest rates are 8 percent? Receiving $775 in future Receiving $700 today

Receiving $700 today

Compute the value in 33 years of a $2,000 deposit earning 9 percent per year. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Future value $ 34364.12 Fv=PV × (1 + i)^n Fv33=$2,000 × (1 + 0.09)^33 = $2,000 × 17.18203 = $34,364.06

What annual rate of return is earned on a $5,000 investment when it grows to $7,750 in four years? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

11.58 correct %

Four Years Future Value What is the future value of $10,000 deposited for four years earning 9% interest rate annually?

14,116 PV = 10,000, PMT = 0, I =9, N = 4, FV = 14,116

Solving for Rates What annual rate of return is earned on a $3,800 investment when it grows to $8,100 in eighteen years?

4.29 PV = -3,800, N = 18, PMT = 0, FV = 8,100, CPT I = 4.29

Discounting Two Years What is the present value of a $560 payment in two years when the discount rate is 8 percent?

480.11 FV = 560, PMT = 0, I = 8, N = 2, PV = 480.11

Future Value At age 25 you invest $1,600 that earns 8.5 percent each year. At age 35 you invest $1,600 that earns 11.5 percent per year. In which case would you have more money at age 60? At age 35 invest $1,600 at 11.5 percent. Both yield the same amount at age 60. At age 25 invest $1,600 at 8.5 percent. There is not enough information to determine which case earns the most money at age 60.

At age 25 invest $1,600 at 8.5 percent. At 25: N = 60 - 25 = 35, PV = 1,600, I = 8.5, PMT = 0, CPT FV = 27,807.43 At 35: N = 60 - 35 = 25, PV = 1,600, I = 11.5, PMT = 0, CPT FV = 24,321.57

Approximately how many years are needed to double a $500 investment when interest rates are 13.75 percent per year?

Period 5.24 years n=72/13.75

A deposit of $300 earns the following interest rates: a. 8 percent in the first year. b. 6 percent in the second year. c. 5 percent in the third year. What would be the third year future value? (Round your answer to 2 decimal places.)

$ 360.61 correct

Consider a $1,800 deposit earning 8 percent interest per year for five years.

Consider a $1,800 deposit earning 8 percent interest per year for five years. What is the future value? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Future value $ 2,644.80 correct How much total interest is earned on the original deposit? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Total interest earned $ 844.80 correct How much is interest earned on interest? (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Interest earned on interest $ 124.80 correct

Compute the value in 32 years of a $1,500 deposit earning 8 percent per year. (Do not round intermediate calculations. Round your final answer to 2 decimal places.

Future value $ 17,605.62

How much would be in your savings account in 9 years after depositing $220 today if the bank pays 9 percent per year? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Future value $ 477.82 correct

Determine the interest rate earned on a $1,700 deposit when $2,000 is paid back in one year. (Round your answer to 2 decimal places.)

Interest rate 17.65 correct % $1,700 × (1 + i) = $2,000; Solving for i yields 0.1765, or 17.65 percent

At age 39 you invest $1,500 that earns 8 percent each year. At age 54 you invest $1,500 that earns 11 percent per year. In which case would you have more money at age 65? Investing at age 39 Investing at age 54

Investing at age 39

What is the present value of a $400 payment in one year when the discount rate is 5 percent? (Round your answer to 2 decimal places.)

Present value $ 380.95 PV = FV/(1+i) PV = $400 / (1 + 0.05) = $400 / 1.05 = $380.95

What is the present value of a $1,050 payment made in seven years when the discount rate is 9 percent?

Present value $ 574.49 PV = FV/(1 + i)^N PV = $1,050 / (1 + 0.09)^7 = $1,050 / 1.82804 = $574.39

What is the present value of a $1,800 payment made in six years when the discount rate is 8 percent? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Present value $ 1,134.31 correct