a. What is the future value in five years of $1,100 invested in an account with
ID: 2757351 • Letter: A
Question
a.
What is the future value in five years of $1,100 invested in an account with an APR of 10 percent, compounded annually? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Future value
$
b.
What is the future value in five years of $1,100 invested in an account with an APR of 10 percent, compounded semiannually? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Future value
$
c.
What is the future value in five years of $1,100 invested in an account with an APR of 10 percent, compounded monthly? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Future value
$
d.
What is the future value in five years of $1,100 invested in an account with an APR of 10 percent, compounded continuously? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Future value
$
a.
What is the future value in five years of $1,100 invested in an account with an APR of 10 percent, compounded annually? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Explanation / Answer
b)FV=P(1+r/100)t
P=$1,100
R=10% p.a Compounded 6 monthly i.e. 5 % semi annually
T=5 years ie 10 periods
FV=1,100 x (1+5/100)10
=1,100 x (1.05)10
=1,100 x 1.628894627
=$ 1,791.78
c)FV=P(1+r/100)t
P=$1,100
R=10% p.a Compounded monthly ie 0.833333333 % monthly
T=5 years ie 60 periods
FV=1,100 x (1+0.833333333/100)60
=1,100 x (1.008333333)60
=1,100 x 1.645308935
=$ 1,809.84
d)FV=P(1+r/100)t
P=$1,100
R=10% p.a Compounded daily i.e. 0.0273% daily
T=5 years ie 5x 365 =1,825periods
FV=1,100 x (1+0.0273/100)1825
=1,100 x (1.00027397)1825
=1,100 x 1.64860837
=$ 1,813.47
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