E120_SUM11_HW1

# E120_SUM11_HW1 - E120 Homework 1 Due 07/01/2010 Problem 1:...

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E120 Homework 1 Due 07/01/2010 Problem 1: Calculate the future value of \$2000 in 1. 5 years at an interest rate of 5% per year. 2. 10 years at an interest rate of 5% per year. 3. 5 years at an interest rate of 10% per year. 4. Why is the amount of interest earned in part (a) less than half the amount of interest earned in part (b)? Problem 2: What is the present value of \$10,000 received 1. 12 years from today when the interest rate is 4% per year? 2. 20 years from today when the interest rate is 8% per year? 3. 6 years from today when the interest rate is 2% per year? Problem 3: Your brother has oﬀered to give you either \$5000 today or \$10,000 in ten years. If the interest rate is 7% per year, which option is preferable?

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Problem 4: Your grandfather put some money in an account for you on the day you were born. You are now 18 years old and are allowed to withdraw the money for the ﬁrst time. The account currently has \$3996 in it and pays an 8% interest rate. 1. How much money would be in the account if you left the money there until your
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## This note was uploaded on 08/15/2011 for the course ENGR 120 taught by Professor Alder during the Summer '11 term at Berkeley.

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E120_SUM11_HW1 - E120 Homework 1 Due 07/01/2010 Problem 1:...

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