Willie deposits $11,000 into an investment earning 10% interest compounded quart

Question

Willie deposits $11,000 into an investment earning 10% interest compounded quarterly. How much will the investment be worth at the end of 10 years? $14,081.10 $%29,536.10 $28,530.70 $497 852.30 Question 12 1 pts How much must an investor set aside today, in order to have $10,000 four years from today, if the potential investment earns 8% compounded annually? $1,360.50 $7,350.00 O $4,506.10 $3,312.10 Question 13 1 pts How much must an investor set aside today, in order to have $10,000 four years from today, if the potential investment earns 10% compounded semi-annually? O $7,350.00 $4,665.00 $6768.00 o $8,227.00

Explanation / Answer

1.We use the formula:
A=P(1+r/400)^4n
where
A=future value
P=present value
r=rate of interest
n=time period.

Hence

A=$11000(1+10/400)^(4*10)

which is equal to

=$29536.10(Approx).

2.

Present value of inflows=cash inflow*Present value of discounting factor(rate%,time period)

=$10000/1.08^4

which is equal to

=$7350.00(approx).

3.

We use the formula:
A=P(1+r/200)^2n
where
A=future value
P=present value
r=rate of interest
n=time period.

$10000=P(1+10/200)^(2*4)

Hence

P=$10000/(1+10/200)^(2*4)

which is equal to

=$6768.00(approx).

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