Chapter 4 Quiz A https//newconnedtn nect html Quiz Problem 4-4 (LO4.3) For each

Question

Chapter 4 Quiz A https//newconnedtn nect html Quiz Problem 4-4 (LO4.3) For each of these snuations, determine the savings amount Use the trme value of money tables in Extbt1A Exhibit 1C and Exhibit a. What would be the value of a savings account started weth $700. earning 4 percent (compounded annually after 10 years? (Round FV factor to 3 decimal places and final answer to the nearest whole dollar.) b. Brenda Young desires to have $15,000 eight years from now for her daughters college fund. If she will earn 6 percent (compounded annually) on her money, what amount should she deposlt now? Use the prosent value of a single amount calculation. Round PV factor to 3 decimal places and final answer to the nearest whole dollar c. What amount would you have if you deposited $1800 a year for 30 years at 8 percent (compounded annually)? (Round FVA factor to 3 decimal places and final answer to the nearest whole doltar.)

Explanation / Answer

a.

Future value = 700 x (1+4%)^10 = $1,036

b.

Present value = 15000 / (1+6%)^8 = $9,411

c.

Future value = Payment x ((1+Rate)^Years-1)/Rate

Future value = 1800 x ((1+8%)^30-1)/8% = $203,910

a.

Future value = 700 x (1+4%)^10 = $1,036

b.

Present value = 15000 / (1+6%)^8 = $9,411

c.

Future value = Payment x ((1+Rate)^Years-1)/Rate

Future value = 1800 x ((1+8%)^30-1)/8% = $203,910

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