Week2HWFN370 - 5-1A(Compound interest to what amount will...

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Unformatted text preview: 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 =12968.5b. $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 =3019.38d. $21,000 invested for 5 years at 5 percent compounded annually 21000 x (1.05)5 =21000x 1.2762 =26801.915-4A. (Present value) what is the present value of the following future amounts? a. $800 to be received 10 years from now discounted back to the present at 10 percent 800/(1.10)10 = 308.43b. $300 to be received 5 years from now discounted back to the present at 5 percent 300/(1.05)5 = 235.05c. $1,000 to be received 8 years from now discounted back to the present at 3 percent 1000/(1.03)8 = 789.41d. $1,000 to be received 8 years from now discounted back to the present at 20 percent1000/(1.2)8 = 232.56 5-5A. (Compound annuity) what is the accumulated sum of each of the following streams of payments? a. $500 a year for 10 years compounded annually at 5 percent500x{1.05)10-1}/.05 = 500x12.5778 =6289 b. $100 a year for 5 years compounded annually at 10 percent 100 x (1.10)5-1/.10 = 100 x 6.1051 =610.51c. $35 a year for 7 years compounded annually at 7 percent 35 x (1.07)7-1/.07 = 35x 8.65 = 302.8935 x (1....
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Week2HWFN370 - 5-1A(Compound interest to what amount will...

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