If you deposit $2,000 in a bank account that pays 6% interest annually, how much

Question

If you deposit $2,000 in a bank account that pays 6% interest annually, how much will be in your account after 5 years? What is the present value of a security that will pay $29,000 in 20 years if securities of equal risk pay 5% annually? Your parents will retire in 19 years. They currently have $350, 000 saved, and they think they will need $800, 000 at retirement. What annual interest rate must they earn to reach their goal, assuming they don't save any additional funds? If you deposit money today in an account that pays 4% annual interest, how long will it take to double your money? You have $33,556.25 in a brokerage account, and you plan to deposit an additional $5,000 at the end of every future year until your account totals $220, 000. You expect to earn 12% annually on the account. How many years will it take to reach your goal? What's the future value of a 5%, 5-year ordinary annuity that pays $800 each year? If this was an annuity due, what would its future value be? An investment will pay $150 at the end of each of the next 3 years, $250 at the end of Year 4, $300 at the end of Year 5, and $500 at the end of Year 6. If other investments of equal risk earn 11% annually, what is its present value? Its future value? You want to buy a car, and a local bank will lend you $40, 000. The loan will be fully amortized over 5 years (60 months), and the nominal interest rate will be 8% with interest paid monthly. What will be the monthly loan payment? What will be the loan's EAR?

Explanation / Answer

5-1)

Future value PV×(1+r)^n Here, 1 Interest rate per annum 6.00% 2 Number of years                                          5 3 Number of compoundings per per annum                                          1 1÷3 Interest rate per period ( r) 6.00% 2×3 Number of periods (n) 5 Present value (PV) $                       2,000.00 Future value $                       2,676.45 2000*(1+6%)^5

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