Find the future value of an investment of $2,000 made today for the following ra
ID: 2775764 • Letter: F
Question
Find the future value of an investment of $2,000 made today for the following rates and periods: (If you solve this problem with algebra round intermediate calculations to 6 decimal places, in all cases round your final answer to the nearest penny.)
a. 6.25 percent compounded semiannually for 12 years.
b. 7.63 percent compounded quarterly for 6 years.
c. 8.9 percent compounded monthly for 10 years.
d. 10 percent compounded daily for 3 years.
e. 8 percent compounded continuously for 2 years.
Explanation / Answer
a.
rate (r)=6.25/2=3.125% term(t)=12*2=24 times initial investment(P)= 2,000
Future value=P*ert
= 2000*e.03125*24
= 2000*e.75
= 2000*1.75
=3,500
b.
r=7.63/4=1.9075 t=6*4=24 P=2,000
Future value=2000e.019075*24
2000*e.4578
=2000*1.4578
=2915.60
c.
r=8.9/12=.741666%, n=12*10=120, P=2000,
Future value= 2000e.007417*120
= 2000e.889999
= 2000*1.889999
=3779.9984
d.
r=10/365=.027397 t=3*365=1095
F=2000e.000274*1095
= 2000e.299997
=2000*1.299997
=2599.9943
e. r=8% t= 2 P=2000
F=2000e.08*2
=2000e.16
=2000*1.16
=2320
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