MM255 Unit 6 Willie's Investment Joey D. Finley

MM255 Unit 6 Willie's Investment Joey D. Finley -...

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Willie's Real Estate     1 Unit 6: Compound Interest - Project You must show your work on all problems.  You may type your answer right into this  document. Total points for project:  45 points.  Projects must be submitted as a Microsoft Word document and uploaded to the  Dropbox for Unit 1 All Projects are due by Tuesday at 11:59 PM ET of the assigned Unit. NOTE:  Project problems should not be posted to the Discussion threads. Questions on  the project problems should be addressed to the instructor by sending an email or by  attending office hours. Part I.   Basic Computations 1. Find the future value (5 points) and compound interest (5 points) on $5,000 for  three years if the interest is compounded semiannually at 12%.   Answer:   FV=  P(1+r/n) n*t 5000[1+(12%/2)] 2*3 5000(1+6%) 6 5000(1.06) 6 5000(1.41852)= $7092.60 is Future Value , 7092.60-5000= $2092.60 is Compund Interest. 2.  You have $10,000 that you plan to invest in a compound-interest bearing interest.  Your  investment agent advises you that you can invest the $10,000 at 8% compounded quarterly for  three years or you can invest it at 8 ¼ % compounded annually for three years.  Which  investment should you choose to receive the most interest?  (10 points)  Answer:    a. Fv= P(1+r/n) n*t 10,000[1+(8%/4)] 4*3 10,000(1.02) 12 10,000(1.26824)=  $12,682.42  or
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Willie's Real Estate     2 b.  Fv=P(1+r/n) n*t 10,000[1+(8.25%/1)] 1*3 10,000(1.0825) 3 10,000(1.26848)= $12,68 4.80 8 ¼ % compounded annually for three years  gives a higher yield.  
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Willie's Real Estate     3 Part II.  Case Study  Willie owns and manages a number of real-estate rental properties in town and enjoys  being his own boss.   At 46 years old, Willie figures he would like to retire after working 
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This document was uploaded on 05/31/2011.

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MM255 Unit 6 Willie's Investment Joey D. Finley -...

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