1. Anthony invested a sum of money 4 years ago in a savings account that has sin
ID: 2775268 • Letter: 1
Question
1. Anthony invested a sum of money 4 years ago in a savings account that has since paid interest at the rate of 4%/year compounded quarterly. His investment is now worth $35,177.36. How much did he originally invest?
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2. David owns $20,000 worth of 10-year bonds of Ace Corporation. These bonds pay interest every 6 months at the rate of 5%/year (simple interest). How much income will David receive from this investment every 6 months? $ How much interest will David receive over the life of the bonds?
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3. Find the accumulated amount A if the principal P is invested at the interest rate of r/year for t years. (Round your answer to the nearest cent.) P = $1200, r = 6%, t = 3.5, compounded semiannually
A = $
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4. Find the accumulated amount A if the principal P is invested at the interest rate of r/year for t years. (Round your answer to the nearest cent.) P = $1200, r = 9 1/2 %, t = 3, compounded annually
A= $
Explanation / Answer
Quarterly rate R= 4%/4 =1%
No. of compounding n = 4x4 =16
FV= 35,177.36
We have following formula for PV:
PV = FV/ (1+r)^n
= 35,177.36/(1+0.01)^16
=35,177.36/1.1726
=29,999.45
amount originally invested is 29,999.45.
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