1. (Compound Interest) To what amount will the following investment accumulate?
ID: 2663389 • Letter: 1
Question
1. (Compound Interest) To what amount will the following investment accumulate? $5,000 invested for 10 years at 10 percent compounded annually.2. (Present Value) What is the present value of the following future amounts? $800 to be received 10 years from now discounted back to the present at 10 percent.
3.(Compound Annuity) What is the accumulated sum of each of the following stream of payment? $500 a year for 10 years compounded annually at 5 percent
4. (Present Value of an annuity) What is the present value of the following annuity? $2,500 a year for 10 years discounted back to the present at 7 percent
Explanation / Answer
1. (Compound Interest) To what amount will the following investment accumulate? $5,000 invested for 10 years at 10 percent compounded annually. Future Value of 1 for 10 years at 10% = 2.59374 Future Value of $5,000 for 10 years at 10% = 5000 x 2.59374 = $12,968.70 2. (Present Value) What is the present value of the following future amounts? $800 to be received 10 years from now discounted back to the present at 10 percent. Present Value of 1 for 10 years at 10% = .38554 Present Value of 800 for 10 years at 10% = 800 x .38554 = $308.43 3. (Compound Annuity) What is the accumulated sum of each of the following stream of payment? $500 a year for 10 years compounded annually at 5 percent Future Value of Annuity of 1 for 10 years at 10% = 15.93743 Future Value of Annuity of $ 500 for 10 years at 10% = 500 x15.93743 = $7,968.72 4. (Present Value of an annuity) What is the present value of the following annuity? $2,500 a year for 10 years discounted back to the present at 7 percent Present Value of Annuity 1 for 10 years at 7% = Take the figure from table. Present Value of Annuity 2,500 for 10 years at 7% = 2,500 x Take the figure from table.
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