How much would be in your savings account in seven years after depositing $350 t

Question

How much would be in your savings account in seven years after depositing $350 today if the bank pays 10 percent per year?

The past five monthly returns for K and Company are 5.65 percent, 5.82 percent, -.75 percent, -.05 percent, and 10.40 percent. What is the average monthly return?

Compute the present value of $550 paid in three years using the following discount rates: 5 percent in the first year, 6 percent in the second year, and 7 percent in the third year. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Explanation / Answer

1.We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

A=$350*(1.1)^7

=$350*1.9487171

=$682.05(Approx)

2.average monthly return=Total of returns/Total time period

=(5.65+5.82-0.75-0.05+10.4)/5

=4.214%

3.

We use the formula:
A=P(1+r/100)^n
where
A=future value
P=present value
r=rate of interest
n=time period.

550=P*(1.05)*(1.06)*(1.07)

550=P*1.19091

P=550/1.19091

=$461.83(Approx).

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