EGN 3212 Assignment 3 (1)-Saved to this PC Abbo Layout References Mailings Revie
ID: 2812024 • Letter: E
Question
EGN 3212 Assignment 3 (1)-Saved to this PC Abbo Layout References Mailings Review View Help Tell me what you want to do 1 Normat 1 No Spac... Heading 1 Heading 2 Tit Subtitle Su Paragraph styles Q7- Early detection of cracks may reduce repair costs by an estimated amount of $200,000 per year. If the savings start now and continue through year 5, determine the equivalent future worth in year 5 of these savings at an interest rate of 10% per year. Q8- Ahmed plans to deposit money starting now for his son's education and continue through year 10. If he deposits S5000 each year starting now, how much will his son be able to withdraw starting in year l 1 and continue through year 15 + Interest is 8% per year. DOLL F3Explanation / Answer
Q7. Future value= Current value((1+ interest rate)^number of years)
where, current value=$200,000 interest rate=10% number of years=5
Future value= 200000(1+0.1)^5
=200000x1.61
=$322,000
Q8. Principal=$5000, Rate=8%, Time=10years
The amount the son would be able to withdraw in the beginning of the 11th year can be calculated by:
A=P(1+R/n)^nt
where n= number of times interest is compounded per year
and, R=interest rate in decimals
A= 5000(1+.08/1)^1.10
=5000(1.08)^10
=5000x 2.159
=$10,795
if the son does not withdraw the money at the beginning of the 11th year and continues making the same deposit till the 15+ years, then the amount would be=
A=P(1+R/n)^nt
=5000(1+.08/1)^15
=5000(1.08)^15
=5000x3.172
=$15,860
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