Please help me in alll the parts it will mwan much to me A,what is the future va
ID: 2799967 • Letter: P
Question
Please help me in alll the parts it will mwan much to me
A,what is the future value of $1000 left in a savings account earning 5% for 4 years compounded semi-annually? IS b. Mary won $25,000 in lottery and is offered to either take the whole amount today, or 7 payments of S3,350 in the next 7 years. Which option should she consider if current interest rate is 2.5%, and she is not in urgent need of the cash currently? Tom needs $18,000 in 10 years, for his retirement time, to buy a boat. How much does he need to save today, if interest rate is 6% and compounded semi-annually? c.Explanation / Answer
a.
Future value=1000*(1+(5%/2))^(4*2)=1218.40
b.
Present value of payments in 7 years=3350/1.025^1+3350/1.025^2+3350/1.025^3+3350/1.025^4+3350/1.025^5+3350/1.025^6+3350/1.025^7
=21270
the present value of 7 payments is less than 25000 today one time ,. so choose to get 25000 today
c.
need today=18000/(1+(6%/2))^(10*2)
=9966.16
the above are answers
Related Questions
Hire Me For All Your Tutoring Needs
Integrity-first tutoring: clear explanations, guidance, and feedback.
Drop an Email at
drjack9650@gmail.com
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.