1.Assume that you deposit $ 3,727 into an account that pays 6 percent per annum.
ID: 2632393 • Letter: 1
Question
1.Assume that you deposit $ 3,727 into an account that pays 6 percent per annum. How much money will be in the account 25 years from today? (Round your answer to 2 decimal places; record your answer without commas and without a dollar sign).
2.You borrowed some money at 8 percent per annum. You repay the loan by making three annual payments of $ 245 (first payment made at t = 1), followed by five annual payments of $ 440 , followed by four annual payments of $ 833 . How much did you borrow? (Round your answer to 2 decimal places; record your answer without commas and without a dollar sign).
Explanation / Answer
Problem 1:
Answer is $15995.80
To get the answer, use the future value formula with
n = 25
i = 0.06
PV = 3737
Problem 2
Answer is $3606.06
To determine this, use present value formula to calculate each set of payments.
Present Value of first 3 payments:
$631.39
Present value of next 5 payments:
$1394.60
Present value of last 4 payments:
$1580.07
Add the amounts together to get the total loan amount of $3606.06
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