1) Today you are depositing $136 in a bank account that promises to pay 7% inter
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1) Today you are depositing $136 in a bank account that promises to pay 7% interest annually. How much interest will you have earned at the end of one year? Round your answer to the nearest cent.
Today you are depositing $408 in a bank account that promises to pay 4.1% interest, annually compounded. How much interest will you have earned at the end of two years? Round your answer to the nearest cent.
If I borrow $1000 from my bank today and they charge interest at a rate of 5.5 percent, annually compounded, how much will I have to pay back when the loan matures one year from now? Round your answer to the nearest cent.
What is the future value of $423 invested today at 7 percent interest compounded annually for 7 years? Round your answer to the nearest cent.
What is the present value of $601 to be received in 10 years? The discount rate is 5 percent. Round your answer to the nearest cent.
Today you are depositing $136 in a bank account that promises to pay 7% interest annually. How much interest will you have earned at the end of one year? Round your answer to the nearest cent. Flag this Question Question 21 ptsToday you are depositing $408 in a bank account that promises to pay 4.1% interest, annually compounded. How much interest will you have earned at the end of two years? Round your answer to the nearest cent. Today you are depositing $408 in a bank account that promises to pay 4.1% interest, annually compounded. How much interest will you have earned at the end of two years? Round your answer to the nearest cent. Flag this Question Question 31 ptsIf I borrow $1000 from my bank today and they charge interest at a rate of 5.5 percent, annually compounded, how much will I have to pay back when the loan matures one year from now? Round your answer to the nearest cent. If I borrow $1000 from my bank today and they charge interest at a rate of 5.5 percent, annually compounded, how much will I have to pay back when the loan matures one year from now? Round your answer to the nearest cent. Flag this Question Question 41 ptsWhat is the future value of $423 invested today at 7 percent interest compounded annually for 7 years? Round your answer to the nearest cent. What is the future value of $423 invested today at 7 percent interest compounded annually for 7 years? Round your answer to the nearest cent. Flag this Question Question 51 ptsWhat is the present value of $601 to be received in 10 years? The discount rate is 5 percent. Round your answer to the nearest cent. What is the present value of $601 to be received in 10 years? The discount rate is 5 percent. Round your answer to the nearest cent.Explanation / Answer
(1) Calculate the Interest earned at the end of one year:
Deposit amount is $136
Annual interest rate is 7%
Interest earned at the end of one year is [$136 * 7%] = $9.52
(2) Calculate the interest amount earned at the end of two years:
Deposit amount is $408
Annual interest rate is 4.1%
Interest earned at the end of first year is [$408 * 0.041] = $16.728
Interest earned at the end of second year is [($408 - $16.728) * 0.041] = $16.04
Therefore, total interest earned at the end of two years [$16.728 + $16.04] = $32.76
(3) Calculate the future value of your borrowed amount:
Here, you have borrowed $1,000 at a rate of 5.5% from my bank
Therefore, the Present value of your borrowed amount is $1,000
Interest rate is 5.5%
Number of years is 1 year
Future value i.e. the amount you have to pay back when the loan matures one year from now.
So you have to calculate the future value of your borrowed amount.
Calculate the Future value of your borrowed amount:
FV = PV (1+r)
= $1,000 (1+0.055)
= $1,055
Therefore, the amount you have to pay back is $1,055
(4) Calculate the Future Value (FV):
Your present investment amount is $423
Interest rate is 7% compounded annually for 7 years
FV = PV (1+r)
= $423 (1+0.07)7
= $423 (1.6057815)
= $679.25
Therefore, the Future value of your present investment of $423 is $679.25
(5) Calculate the Present value (PV):
Amount received in 10 years is $601 (Future value)
Discount rate is 5%
Calculate the Present Value (PV):
PV = FV / (1+r)n
= $601 / (1+0.05)10
= $601 / (1.628895)
= $368.96
Therefore, the Present value of your future worth of $601 is $368.96
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