Exercise 2. Suppose you want to put money into a simple interest account that pa
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Question
Exercise 2. Suppose you want to put money into a simple interest account that pay 2.7%, for 8 years. Your hope is to end up with $15000. How much money do you need to invest into the account to achieve this goal? Exercise 3. Suppose you find a compound interest account with an interest rate of 2.7% compounded daily. How much money would you have to invest into this account if you wanted to end up with $15000 after 8 years? Exercise 4. If you start out with only S500 in a an account that pays 3.3% compounded weekly, how much will your money be worth in 12 years? Exercise 5. Pat Gilbert recently set up an annuity to save for retirement. She arranged for S175 to be taken out of her monthly checks, it will earn 10.5% interest. She just had her thirty-ninth birthday, and her annuity comes to term when she is 65. Find the following: a) The future value of the account. b) Pat's total contribution to the account. c) The total interest. Exercise 6. Suppose you find an annuity that pays 8.2%. You want to pay into the account monthly. Your goal is to have $20000 in 15 years. What would your monthly payments need to be to achieve this goal?Explanation / Answer
Answer 2:
Amount = 15000
Time = 8 yrs
Rate = 2.7 %
A = P( 1 + ( RT / 100))
15000 = P ( 1 + (2.7* 8 / 100))
15000 = P ( 100 + 21.6) / 100
15000 * 100 = P * 121.6
P = 15000 * 100 / 121.6
P = 12335.52 Ans.
Answer 3:
Amount = 15000
Time = 8 yrs
Rate = 2.7 % compounded daily = 2.7 / 365 pa
15000 = P( 1 + ( 2.7 /365 * 100))8*365
15000 = P( 1 + negligible) 8*365
15000 = P
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