Lab-2 Problem )A woman deposits $2000 in a savings account that pays interest at
ID: 1150568 • Letter: L
Question
Lab-2 Problem )A woman deposits $2000 in a savings account that pays interest at 8% per year, compounded annually. If all the money is allowed to accumulate, how much will she have at the end of (a) 10 years? (b) 15 years? 2 How much money must be deposited in a savings account so that $5500 can be withdrawn 12 years hence, if the interest rate is 9% per year, compounded annually, and if all the interest is allowed to accumulate?. Suppose that a person deposits $500 in a savings account at the end of each year, starting now, for the next 12 years. If the bank pays 8% per year, compounded annually, how much money will accumulate by the end of the 12-year period? The ABD Company is building a new plant, whose equipment maintenance costs are expected to be S500 the first year, S150 the second year, $200 the third year, $250 the fourth year, etc increasing by $50 per year through the 10th year. The plant is expected to have a 10-year life. Assuming the interest rate is 8%, compounded annually, how much should the company plan to set aside now in order to pay for the maintenance?. 3) 4) 5) Slick Oil Company is considering the purchase of a ne machine that will last 5years and cost $50 000; maintenance will cost S6000 the first year, decreasing by S1000 each year to $2000 the fifth year. If the interest rate is 8% per year compounded annually, how much money should the company set aside for this machine?.Explanation / Answer
A = P(1+r)T
A = 2000*(1+0.08)10
A = 2000*(1.08)10
A = 2000*2.16 =4320 $. In 10 years the savings of $2000 will amount to $4320.
Solve for A using P= $2000, r= 0.08 and T= 15
A = 2000*(1+0.08)15
A = 2000*(1.08)15
A = 2000*3.17 = $6340. In 15 years the savings of $2000 will amount to $6340.
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