We made 10 annual deposits of $3000 each on December 31.What will be the balance
ID: 2460165 • Letter: W
Question
We made 10 annual deposits of $3000 each on December 31.What will be the balance at 5% interest?What is the total interest earned?
How much should be deposited today to have $90,000 in 20 years at 7% interest?What is the total interest earned?
How much should be deposited today so that we can withdraw $40,000 every year on December 31 for 10 years at 8%?What is the total interest earned?
We deposited $1500 today. What will be the balance in 2 years at 24% interest compounded monthly?
What will be the balance if compounded quarterly?
If You borrow money to buy a house, and your annual payments are $24,000 for 15 years. Assuming a 6% interest rate, what was the home’s purchase price? How much are you actually paying for the house, including interest? How much is the bank making off of you (interest)?
Explanation / Answer
Annual deposit = $3000
r =5%
t = 10
Balance = A = p(1+r/t)^nt
A = 3000(1+0.05/1)^10x1
A = $ 4886.68
Balance at 5 % = $4886.68
Time Interest earned = $4886.68 - 3000
Time Interest earned = $1886.68
Fv = $90000
t = 20 years
r = 7%
PV = FV/(1+r)^n
Pv = 90000/(1+0.07)^20
PV = 90000/3.869684
PV = $23257.71
Time Interest earned = 90000 - 23257.71 =$66742.29
Amount deposited today = $1500
r = 24% compounded monthly
t = 2 years
n = 12 compounded monthy
A = P*(1+r/n)^nt
A = 1500x(1+0.24/12)^12x2
A = 1500 x 1.608437
A =$2412.656
Balance if Compounded quarterly
A = P*(1+r/n)^nt
A = 1500*(1+0.24/4)^4*2
A = 1500x1.593848
A = $2390.772
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