Time Value of Money Concept The following situations involve the application of

Question

Time Value of Money Concept The following situations involve the application of the time value of money concept. Use the full factor when calculating your results Use the appropriate present or future value table: FV of $1, PV of $1, FV of Annuity of $1 and PV of Annuity of $1 1. Janelle Carter deposited $9,750 in the bank on January 1, 2000, at an interest rate of 12% compounded annually. How much has accumulated in the account by January 1, 2017? Round to the nearest whole dollar. 21,554X 2. Mike Smith deposited $21,600 in the bank on January 1, 2007. On January 2, 2017, this deposit has accumulated to $42,486. Interest is compounded annually on the account. What rate of interest did Mike earn on the deposit? Round to the nearest whole percent. 3. Lee Spony made a deposit in the bank on January 1, 2010. The bank pays interest at the rate of 8% compounded annually. On January 1, 2017, the deposit has accumulated to $15,000. How much money did Lee originally deposit on January1, 2010? Round to the nearest whole dollar 876 X 4. Nancy Holmes deposited $5,800 in the bank on January 1 a few years ago. The bank pays an interest rate of 10% compounded annually, and the deposit is now worth $15,026. How many years has the deposit been invested? Round to the nearest whole year. 10 years

Explanation / Answer

Question - 1

By Jan i, 2017 we have 17 years completed.

Amount = Principle ( 1 + r )n

9750 ( 1.12)17= 66944...................final answer

Question - 3

Prinicple ( 1.08)7 = 15000

Principle = 15000 / 1.7138 = 8752............final answer

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