Principles of finance

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nc2424

Business Finance

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After reviewing the resources for this module, go into MyFinanceLab and complete the assignment for Module Five. Grades in MyFinanceLab will be converted to points in the Grade Center.

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(Related to Checkpoint 5.2) (Future value) To what amount will $4,900 invested for 9 years at 10 percent compounded annually accumulate? $4,900 invested for 9 years at 10 percent compounded annually will accumulate to S (Round to the nearest cent.) (Related to Checkpoint 5.2) (Future value) Leslie Mosallam, who recently sold her Porsche, placed $8,400 in a savings account paying annual compound interest of 5 percent. a. Calculate the amount of money that will accumulate if Leslie leaves the money in the bank for 3, 7, and 17 year(s). b. Suppose Leslie moves her money into an account that pays 7 percent or one that pays 9 percent. Rework part (a) using 7 percent and 9 percent. c. What conclusions can you draw about the relationship between interest rates, time, and future sums from the calculations you just did? a. After placing $8,400 in a savings account paying annual compound interest of 5 percent, the amount of money that will accumulate if Leslie leaves the money in the bank for 3 year(s) is $ (Round to the nearest cent.) (Related to The Business of Life: Saving for Your First House) (Future value) You are hoping to buy a house in the future and recently received an inheritance of $18,000. You intend to use your inheritance as a down payment on your house. a. If you put your inheritance in an account that earns 7 percent interest compounded annually, how many years will it be before your inheritance grows to $35,000? b. If you let your money grow for 10.5 years at 7 percent, how much will you have? c. How long will it take your money to grow to $35,000 if you move it into an account that pays 5 percent compounded annually? How long will it take your money to grow to $35,000 if you move it into an account that pays 12 percent? d. What does all this tell you about the relationship among interest rates, time, and future sums? a. If you put your inheritance in an account that earns 7 percent interest compounded annually, how many years will it be before your inheritance grows to $35,000? years (Round to one decimal place.) (Related to Checkpoint 5.3) (Compound interest with non-annual periods) Calculate the amount of money that will be in each of the following accounts at the end of the given deposit period: Annual Interest Rate 12% Compounding Periods (Years) 10 Account Holder Theodore Logan III Vernell Coles Tina Elliot Wayne Robinson Eunice Chung Kelly Cravens Amount Deposited $ 1,000 96,000 8,000 119,000 31,000 16,000 Compounding Periods Per Year (M) 4 6 3 8 8 2 4 12 3 12 1 12 2 5 3 8 a. The amount of money in Theodore Logan III's account at the end of 10 years will be $ (Round to the nearest cent.) (Related to Checkpoint 5.2) (Compound interest with non-annual periods) You just received a bonus of $1,000. a. Calculate the future value of $1,000, given that it will be held in the bank for 8 years and earn an annual interest rate of 6 percent. b. Recalculate part (a) using a compounding period that is (1) semiannual and (2) bimonthly c. Recalculate parts (a) and (b) using an annual interest rate of 12 percent. d. Recalculate part (a) using a time horizon of 16 years at an annual interest rate of 6 percent. e. What conclusions can you draw when you compare the answers in parts (c) and (d) with the answers in parts (a) and (b)? a. What is the future value of $1,000 in a bank account for 8 years at an annual interest rate of 6 percent? (Round to the nearest cent.)
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Finance Questions
I used Excel Computations
Q1
$4,900 invested for 9 years at 10 percent compounded annually will accumulate $11,553.94.
Q2
a) At 5 percent
For 3 years: $9,724.05
For 7 years: $11,819.64
For 17 years: $19,252.95

b) At 7 percent
For 3 years: $10,290.36
For 7 years: $13,488.56
For 17 years: $26,534.05

At 9 percent
For 3 years: $10,878....


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