FIN359-TVM-expl - CH4: TVM EXAMPLES 1. If you have a choice...

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CH4: TVM EXAMPLES 1. If you have a choice to earn simple interest on $10,000 for three years at 8% or annually compound interest at 7.5% for three years which one will pay more and by how much? 2. Bradley Snapp has deposited $7,000 in a guaranteed investment account with a promised rate of 6% compounded annually. He plans to leave it there for 4 full years when he will make a down payment on a car after graduation. How much of a down payment will he be able to make? 3. The great, great grandparents of one of your classmates sold their factory to the government 104 years ago for $150,000. If these proceeds had been invested at 6%, how much would this legacy be worth today? Assume annual compounding. 4. You have deposited $1,500 in an account that promises to pay 8% compounded quarterly for the next five years. How much will you have in the account at the end? 5. What is the future value of investing $9,000 for 7 years at a continuously compounded rate of 11%? 6.
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FIN359-TVM-expl - CH4: TVM EXAMPLES 1. If you have a choice...

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