Sandra wants to deposut $100 each year for her son. If she places her deposits i
ID: 2637845 • Letter: S
Question
Sandra wants to deposut $100 each year for her son. If she places her deposits in a savings account that pays 5% per year, what amount will be in the account in 20 years?
If she places it in a savings account that pays 5%, the amount that will be in the account in 20 years is $_____
Luis wants to know how much he will have available to spend on his trip to Belize in three years if he deposits $3000 today at an interest rate of 9%
If he deposits $3000 today at an interest rate of 9%, the amount Luis will have available to spend on his trip to Belize in 3 years is $________
How much will you have in 36 months if you invest $75 a month at 10% annual interest?
You will have $_________
Cheryl wants to have $2000 in spending money to take on a trip to Disney World in 3 years. How much must she deposit now in a savings account that pays 5% to have the money she needs in 3 years?
To have $2000 in 3 years, Cheryl would need to deposit $_______
Juan would like to give his newly born grandson a gift of $10,000 on his 18th birthday, Juan can earn 7% interest per year on a certificate of deposit. How much must he deposut now in order to achieve his goal?
In order to given his grandson $10,000 on his 18th birthday, Juan needs to deposit $_____
Winners of the Georgia Lotto drawing are given the choice of receiving the winning amount divided equally over 20 years as a lump sum cash option amount. The cash option amount is determined by discounting the annual winning payment at 7% over 20 years. This week the lottery is worth $6 million to a single winner. What would the cash option payout be?
The cash option payout would be $_____
Explanation / Answer
1)
Sandra wants to deposut $100 each year for her son. If she places her deposits in a savings account that pays 5% per year, what amount will be in the account in 20 years?
Working
Amount that will be in the account in 20 years = fv(rate,nper,pmt,pv)
rate = 5%
nper =20
pmt = 100
pv = 0
Amount that will be in the account in 20 years = fv(5%,20,100,0)
Amount that will be in the account in 20 years = $ 3306.60
Answer
If she places it in a savings account that pays 5%, the amount that will be in the account in 20 years is $ 3306.60
2)
Luis wants to know how much he will have available to spend on his trip to Belize in three years if he deposits $3000 today at an interest rate of 9%
Working
Amount Luis will have available to spend on his trip = 3000*1.09^3
Amount Luis will have available to spend on his trip = $ 3385.09
Answer
If he deposits $3000 today at an interest rate of 9%, the amount Luis will have available to spend on his trip to Belize in 3 years is $ 3385.09
3)
How much will you have in 36 months if you invest $75 a month at 10% annual interest?
Working
Amount that will you have in 36 months = fv(rate,nper,pmt,pv)
rate = 10%/12
nper =36
pmt = 75
pv = 0
Amount that will you have in 36 months = fv(10%/12,36,75,0)
Amount that will you have in 36 months = $ 3133.64
Answer
You will have $ 3133.64
4)
Cheryl wants to have $2000 in spending money to take on a trip to Disney World in 3 years. How much must she deposit now in a savings account that pays 5% to have the money she needs in 3 years?
Working
Cheryl would need to deposit = 2000/1.05^3
Cheryl would need to deposit = $ 1727.68
Answer
To have $2000 in 3 years, Cheryl would need to deposit $ 1727.68
5)
Juan would like to give his newly born grandson a gift of $10,000 on his 18th birthday, Juan can earn 7% interest per year on a certificate of deposit. How much must he deposut now in order to achieve his goal?
Working
Juan needs to deposit = 10000/1.07^18
Juan needs to deposit = $ 2958.64
Answer
In order to given his grandson $10,000 on his 18th birthday, Juan needs to deposit $ 2958.64
6)
Winners of the Georgia Lotto drawing are given the choice of receiving the winning amount divided equally over 20 years as a lump sum cash option amount. The cash option amount is determined by discounting the annual winning payment at 7% over 20 years. This week the lottery is worth $6 million to a single winner. What would the cash option payout be?
Working
The cash option payout would be = pv(rate,nper,pmt,fv)
rate = 7%
nper = 20
pmt = 6000000/20 = 300000
fv = 0
The cash option payout would be = pv(7%,20,300000,0)
The cash option payout would be = $ 3,178,204.27
Answer
The cash option payout would be $ 3,178,204.27
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