Calculate, to the nearest cent, the future value FV of an investment of $10,000

Question

Calculate, to the nearest cent, the future value FV of an investment of $10,000 at the stated interest rate after the stated amount of time. HINT [See Example 1.]

5% per year, compounded daily (assume 365 days/year), after 12 years

2.)Compute the specified quantity.

You are expecting a tax refund of $4,000 in 5 weeks. A tax preparer offers you an "interest-free" loan of $4,000 for a fee of $50 to be repaid by your refund check when it arrives in5 weeks. Thinking of the fee as interest, what simple interest rate would you be paying on this loan? HINT [See Example 6.] (Round your answer to three decimal places.)

Explanation / Answer

FV = PV*(1+r/m)mn

=> FV = $10,000 * (1+.05/365)365*12

=> FV = $10,000 * 1.822044

=> FV = $18,220.44

Thus, the Future Value is $18,220.44

(2) Let the simple interest be 'r'

3950 = 4000(1+ (5/52)r)

3950 = 4000 + (20000/52)r

-50 = (20000/52)r

-50 * (52/20000) = r

.13 = r

13 %

Thus, the simple interest on loan is 13%

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