1.If changing market conditions cause a company earning $12,000,000 in 2005 to p
ID: 2904339 • Letter: 1
Question
1.If changing market conditions cause a company earning $12,000,000 in 2005 to project a loss of 3% of its profit in each of the next 5 years, what profit does it project in 2010?
2.Suppose a country has a population of 20 million and projects a growth rate of 3% per year for the next 20 years. What will the population of this country be in 6 years? (Round your answer to two decimal places.) millions
3.Mary Stahley invested $2500 in a 12-month certificate of deposit (CD) that earned 6.5% annual simple interest. When the CD matured, she invested the full amount in a mutual fund that had an annual growth equivalent to 17% compounded annually. After 5 years in the mutual fund, how much was her investment worth? (Round your answer to the nearest cent.)
$
Explanation / Answer
1. The changing market conditions cause a company earning $12,000,000 in 2005 to project a loss of 3% of its profit in each of the next 5 years. Then its profit in 2006 will be 0.97*$12,000,000 , (0.97)2*$12,000,000,... , (0.97)5*$12,000,000 in 2006,2007,...,2010. Thus, the projected profit of the company in 2010 will be (0.97)5*$12,000,000 or $ 1200000* 0.858734025 = $10304.81 ( on rounding off to the nearest cent).
2. A country having a population of 20 million projects a growth rate of 3% per year for the next 20 years.Then the population of this country be in 6 years will be 20*(1.03)6 = 20*1.194052297 = 23.88 million( on rounding off to 2 decimal places).
3.The interest on a 12 month certificate of deposit Of $ 2500, earning 6.5 % annual simple interest is $ 2500*6.5 % = $ 162.50. Thus, the value of Mary Stahley's investment in the Mutual Fund is $ 2500+$162.50 = $ 2662.50. The formula for compound interest is F = P( 1+r/100)t where P is the principal/ initial amount invested,F is the future value, r is the rate of interest in decimals and t is the number of years. Here, P = $ 2662.50, r = 17% = 0.17 and t = 5, so that F = 2662.50( 1+ 0.17)5 = 2662.5(1.17)5 = 2662.5* 2.192448036 = $ 5837.39 ( on rounding off to the nearest cent)
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