Lab-2 Problem )A woman deposits $2000 in a savings account that pays interest at
ID: 1150562 • Letter: L
Question
Lab-2 Problem )A woman deposits $2000 in a savings account that pays interest at 8% per year, compounded annually. If all the money is allowed to accumulate, how much will she have at the end of (a) 10 years? (b) 15 years? 2 How much money must be deposited in a savings account so that $5500 can be withdrawn 12 years hence, if the interest rate is 9% per year, compounded annually, and if all the interest is allowed to accumulate?. Suppose that a person deposits $500 in a savings account at the end of each year, starting now, for the next 12 years. If the bank pays 8% per year, compounded annually, how much money will accumulate by the end of the 12-year period? The ABD Company is building a new plant, whose equipment maintenance costs are expected to be S500 the first year, S150 the second year, $200 the third year, $250 the fourth year, etc increasing by $50 per year through the 10th year. The plant is expected to have a 10-year life. Assuming the interest rate is 8%, compounded annually, how much should the company plan to set aside now in order to pay for the maintenance?. 3) 4) 5) Slick Oil Company is considering the purchase of a ne machine that will last 5years and cost $50 000; maintenance will cost S6000 the first year, decreasing by S1000 each year to $2000 the fifth year. If the interest rate is 8% per year compounded annually, how much money should the company set aside for this machine?.Explanation / Answer
1)
Principal Amount = $2000
Interest rate 8% per annum.
Final amount at the end of n year = 2000(1+0.08)n
a) Final amount At the end of 10 years: 2000(1.08)10 = 2000*2.159 = $4318
b) Final amount At the end of 15 years: 2000(1.08)15 = 2000*3.172 = $6344
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