1. You invest $100,000 at 10% for 1 years. How much will you have? and how much
ID: 2445556 • Letter: 1
Question
1. You invest $100,000 at 10% for 1 years. How much will you have? and how much interest will you earn? 2. You want $300,000 in 10 years. If you can earn 10%, how much do you have to invest (one amount) today? and how much interest will you earn? 3. You want to invest a part of your $200,000 inheritage. You want to receive $10,000 a year each year for 20 years. How much do you have to invest now if you can negotiate a 6% return on your investment? 4. You want to invest a part of your $200,000 inheritage --$150,000. How much will you receive each year, for 20 years if you negotiate a 6% return on your investment?? How much of this is interest?
Explanation / Answer
1. You invest $100,000 at 10% for 1 years. How much will you have? and how much interest will you earn?
Amount will you have after 1 years = 100000*(1+10%)^1
Amount will you have after 1 years = 110000
Interest will you earn after 1 years = 110000-100000
Interest will you earn after 1 years = $ 10000
2. You want $300,000 in 10 years. If you can earn 10%, how much do you have to invest (one amount) today? and how much interest will you earn?
Investment Required = Amount /(1+r)^n
Investment Required = 300000/(1+10%)^10
Investment Required = $ 115,662.99
Interest Earned = 300000-115662.99
Interest Earned = $ 184,337.01
3. You want to invest a part of your $200,000 inheritage. You want to receive $10,000 a year each year for 20 years. How much do you have to invest now if you can negotiate a 6% return on your investment?
Amount to be invested = Annual Payment *(1-(1+r)^-n)/r
Amount to be invested = 10000*(1-(1+6%)^-20)/6%
Amount to be invested = $ 114,699.21
4. You want to invest a part of your $200,000 inheritage --$150,000. How much will you receive each year, for 20 years if you negotiate a 6% return on your investment?? How much of this is interest?
Annual Payment would be recieved = Initial Investment/((1-(1+r)^-n)/r)
Annual Payment would be recieved = 150000/((1-(1+6%)^-20)/6%)
Annual Payment would be recieved = $ 13077.68
Interest would be in Annual Payment = Annual Payment would be recieved - Amount invested/20
Interest would be in Annual Payment = 13077.68 - 150000/20
Interest would be in Annual Payment = $ 5577.68
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