ry Bookmarks Window Help moodle-2017-2018.calstatela.edu s Inte al to Manila Nin

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ry Bookmarks Window Help moodle-2017-2018.calstatela.edu s Inte al to Manila Ninoy Aquino at... Home - Cal State LA STATE LA Moodle 2017-2018 Assume an interest rate of 7% per year. How much would you lose over 7 years if you had to give up interest on the interest-that is, if you received 49% instead of compounded interest? Select one: (: A. 3.496 B. 11.6% C. 0096 D. 7.0% Use the table below to answer the following questions: Present Value of an Annuity of 1 Future Value of an Annuity of 1 Period 496 596 896 1096 4% 5% 896 1096 2.7751 2.7232 2.5771 2.4869 3.12163.1525 3.2464 3.3100 3.6299 3.5460 3.31213.1699 4.2465 4.3101 4.5061 4.6410 .4518 4.3295 3.9927 3.7908 5.4163 5.5256 5.8666 6.1051 5.2421 5.0757 4.6229 4.3553 6.6330 6.80197.33597.7156 6.0021 5.7864 5.2064 4.8684 7.89838.1420 8.9228 9.4872 7327 6.4632 5.7466 5.3349 9.2142 9.5491 10.6366 11.4359 .4353 7.1078 6.2469 5.7590 10.5828 11.0266 12.4876 13.5795 3 6

Explanation / Answer

CALCULATION OF TOTAL GROWTH OF AMOUNT WITH CUMULATIVE VALUE ASSUME THE $ 1 AMOUNT INVESTED = 100% Year Initial Amount Intrest @ 7% Cumulative Value 1 1                           0.070                           1.070 2                           0.075                           1.145 3                           0.080                           1.225 4                           0.086                           1.311 5                           0.092                           1.403 6                           0.098                           1.501 7                           0.105                           1.606 Total grown in 7 year = 1.606-1 = 0.606 or 60.6% Loss if not received compounding = 60.6% - 49% Loss if not received compounding = 11.6% Answer = Option B = 11.6%

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