Unformatted text preview: 4. If you invest $9,000 today, how much will you have: a. In 2 years at 9 percent? 9000*(1.09)^2= 10,632.90 b. In 7 years at 12 percent? 9000*(1.12)^7= 19,896.13 c. In 25 years at 14 percent? 9000*(1.14)^25= 238,157.24 d. In 25 years at 14 percent (compounded semiannually)? 9000*(1.07)^50= 265,113.23 The percentage was cut in half for the semiannually therefore arriving at 7 percent and the years were doubled representing the semiannually therefore arriving at 50 years. 5. Your uncle offers you a choice of $30,000 in 50 years or $95 today. If money is discounted at 12 percent, which should you choose? According to these calculations the money would be worth more today than 50 years from now, so you should accept the money today....
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 Spring '08
 WILLIAMS
 Interest Rate, Net Present Value, Elementary arithmetic, Capital accumulation

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