# Chapter 5 Study Questions answers -...

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5-1A. (Compound interest) to what amount will the following investments accumulate?  a. \$5,000 invested for 10 years at 10 percent compounded annually  5000 x (1.10)10 = 5000 x2.5937 =12968.5 b. \$8,000 invested for 7 years at 8 percent compounded annually  8000 x(1.08)7 = 8000  x 1.7138 = 13710.59  c. \$775 invested for 12 years at 12 percent compounded annually  775 x(1.12)12 = 775 x3.8959 =3019.38 d. \$21,000 invested for 5 years at 5 percent compounded annually  21000 x (1.05)5 =21000x 1.2762 =26801.91 5-2A. (Compound value solving for n) How many years will the following take?  a. \$500 to grow to \$1,039.50 if invested at 5 percent compounded annually  500/1039.5 =.481 See .48 under 5% in pv of \$1 table = 15 years . b. \$35 to grow to \$53.87 if invested at 9 percent compounded annually 35/53.87 =.649 See .649 under 9% in pv of \$1 table = 5 years c. \$100 to grow to \$298.60 if invested at 20 percent compounded annually

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## This note was uploaded on 04/11/2011 for the course FIN 370 taught by Professor Unknown during the Spring '08 term at University of Phoenix.

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Chapter 5 Study Questions answers -...

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