Calculate the compound interest for thefollowing: a. $10,000 invested for 10 yea

Question

Calculate the compound interest for thefollowing:

a. $10,000 invested for 10 years at 10% compoundedannually

b. $4,000 invested for 7 years at 8% compoundedannually

c. $400 to be received 10 years from now discounted back tothe present at 10%

d. $600 to be received 5 years from now discounted back tothe present at 5%

Calculate the compound interest for thefollowing:

a. $10,000 invested for 10 years at 10% compoundedannually

b. $4,000 invested for 7 years at 8% compoundedannually

c. $400 to be received 10 years from now discounted back tothe present at 10%

d. $600 to be received 5 years from now discounted back tothe present at 5%

Explanation / Answer

Interest = FV - Principal = P * (1 + r)^n - P = P * [(1 + r)^n -1] A) 10,000 * (1 + .1)^10 - 10,000 = 15,937.42 B) 4,000 * (1 + .08)^7 - 4,000 = 2,855.30 PV = FV / (1 + r) ^ n C) 400 / (1 + .1)^10 = 154.22 D) 600 / (1 + .05)^5 = 470.12

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