0 ezto.mheducation.com/hm.tpx On January 1, you deposited $7,800 in an investmen

Question

0 ezto.mheducation.com/hm.tpx On January 1, you deposited $7,800 in an investment account The account will earn 8 percent annual compound interest, which will be added to the fund balance at the end of each year. (Future Value of $1 Present Value of $1, Future Value Annuity of $1. Present Value Annuity of $1) (Use appropriate factor(s) from the tables provided.) Required 1. What will be the balance in the account at the end of 10 years? (Round your final answer to the nearest whole dollar amount.) Table or Calulator Function Present Value: i: Future Value 2. What is the interest for the 10 years? (Round your final answer to the nearest whole dollar amount.) Interest How much interest revenue did the fund earn in the first year? the second year? (Round your final answer to the nearest whole dollar amount.) 2 Interest Revenue First Year Second Year

Explanation / Answer

Question 1). Solution :- Balance of investment account at the end of ten years = 7800 * (1 + 0.08)10

= 7800 * (1.08)10

= 7800 * 2.1589

= $ 16839.42 (Rounded off to $ 16839)

Conclusion :- Balance of investment account at the end of ten years = $ 16839.

Question 2). Solution :- Interest for ten years = 16839 - 7800

= $ 9039.

Conclusion :- Interest for 10 years = $ 9039.

Question 3). Solution :- Interest earned in first year = 7800 * (1 + 0.08)1 - 7800.

= 7800 * (1.08)1 - 7800

= 7800 * 1.08 - 7800

= 8424 - 7800

= $ 624.

Interest earned in second year = (7800 + 624) * (1.08) - (7800 + 624)

= 8424 * 1.08 - 8424

= 9097.92 - 8424

= $ 673.92 (Rounded off to $ 674)

Conclusion :-

Interest revenue earned in first year $ 624. Interest revenue earned in second year $ 674.

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