19. You invest $20,000 today and expect to earn 10% per year, compounded annuall

Question

19. You invest $20,000 today and expect to earn 10% per year, compounded annually. How long will it take this amount to grow to $50,000 (round answer to the nearest tenth of a year)? (a) 9.6 years. (b) 4.0 years. (c) 15.0 years. (d) 10.5 years. 20. On January 1, 20X5, Hibiscus Corporation adopted a plan to accumulate funds for environmental improvements beginning July 1, 20x9, at an estimated cost of $2,000,000. Hibiscus plans to make four equal annual deposits in a fund that will earn interest at 8.5% compounded annually. The first deposit is to be made on July 1, 20XS. What should be the amount of each annual deposit (rounded to the nearest dollar)? (a) $562,743. (b) $406,061 (c) $440,576. (d) $610,576. 21. A company that specializes in tax shelters advertised that its special tax. shelter partnerships "earn 21 percent interest for the investor each year". An independent analysis of the actual figures showed that an individual who invested $100,000 would receive a projected return of $310,000 at the end of year 10 from the investment date. What is the actual interest rate that an investor would earn from this investment, assuming annual compounding (round percentage to two decimal places)? (a) 10.83%. (b) 13.40%. (c) 11.98%. (d) 21.00%.

Explanation / Answer

Requirement 19 The alternative d is correct due to following calculations. Year Compounding Factor@10% Principal Future worth 10 2.357947691 20000 47158.95 11 2.59374246 20000 51874.85 So, it takes 10.5 years to grow $50000 Requirement 20 The correct alternative is b Let's analyse the all four alternative alternative 1 2 3 4 Annual deposit 562743 406061 440576 610576 Compounding factor 4.925372826 4.92537283 4.925373 4.925373 Future worth 2771719.08 2000001.81 2170001 3007314 So the correct answer is $406061 Requirement 21 The correct alternative is c Let's analyse the all four alternative alternative 1 2 3 4 Investment amount 100000 100000 100000 100000 Interest rate 10.83 13.4 11.98 21 Compounding factor 2.796232843 3.51666133 3.100307 6.7275 Future worth 279623.2843 351666.133 310030.7 672750 So the correct answer is 11.98% Interest rate Requirement The correct alternative is d Let's analyse the all four alternative alternative 1 2 3 4 Investment amount 3449 2258 406 2212 Interest rate 10% 10% 10% 10% Compounding factor 1.80872595 1.80872595 1.808726 1.808726 Future worth 6238.2958 4084.10319 734.3427 4000.902 So, the correct answer is $2212 As per the Chegg Policy, we are supposed to answer maximum of four sub-part of a question.

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