How to answer this D. Compound Interest(1) (D) Fund A is invested at an effective annual interest rate of 3%. Fund B is invested at an effectiveannual interest rate of 2.5%. At the end of 20 years, the total in the two funds is P 10,000. At theend of 31 years, the amount in Fund A is twice the amount in Fund B. Calculate the total in thetwo funds at the end of 10 years.=Hint: Let A, PA (1.03)' and B, PB(1.025)' be the AV's of Funds A and B at time t respectively.Then use the equations, A20 + B20 = P 10,000 and A31= 2B31 to determine the values of PA andPB.

Compounding interest is there is interest on interest and due to this there interest become larger…

Answered: (1) (D) Fund A is invested at an…

Cornerstones of Financial Accounting

4th Edition

ISBN:9781337690881

Author:Jay Rich, Jeff Jones

Publisher:Jay Rich, Jeff Jones

ChapterA3: Time Value Of Money

Section: Chapter Questions

Problem 12E

See similar textbooks

Similar questions

If 90,000 is invested in a fund on December 31, 2019, and 5 equal annual withdrawals of 23,138.32 are made starting on December 31, 2020, that will deplete the fund, what is the interest rate being earned if interest is compounded annually?
An investment of 1,000 produces a net cash inflow of 500 in the first year and 750 in the second year. What is the payback period? a. 1.67 years b. 0.50 year c. 2.00 years d. 1.20 years e. Cannot be determined
£4,000 is invested at time t=0 and a further 12,000 at t=6. Calculate the value of the fund at the end of 19 years if the rate of interest applicable during this period is 7.7% per annum nominal payable half-yearly for the first 12 years, and 3.3% per quarter year effective thereafter for the remaining years. No tables, Only formulas please
Red Company invested $10,000 in a fund that was earning interest at a rate of 4.00% compounded semi-annually. After 2 years and 6 months, the company transferred these funds to another investment that was earning interest at 5.50% compounded monthly. a. What is the balance in the fund at the end of 2 years and 6 months? $11,040.81 Round to the nearest cent b. What is the balance in the fund at the end of 6 years (from the initial investment)? $0.00 Round to the nearest cent c. By what amount did the fund grow during the 6 year period? Round to the nearest cent Give typing answer with explanation and conclusion
£11,700 is invested at time t=0 and a further 8,800 at time t=5. Calculate the value of the fund after 20 years if the rates of interest applicable during this period are 0.6% per month effective for the first 14 years, and thereafter 7.9% per annum nominal payable quarterly for the remaining years. (correct answer = 77956.92)
Red Company invested $10,000 in a fund that was earning interest at a rate of 3.00% compounded semi-annually. After 3 years and 9 months, the company transferred these funds to another investment that was earning interest at 5.50% compounded monthly. a. What is the balance in the fund at the end of 3 years and 9 months? b. What is the balance in the fund at the end of 6 years (from the initial investment)? c. By what amount did the fund grow during the 6 year period?
A person invests a series of level payments at the end of each month into a sinking fund, with no withdrawals allowed over a 28-year period, at the following annual levels: £1655 per annum for the first 10 years followed by £2323 per annum until the end of year 20 (inclusive). Given that rate of interest is 5.9% pa convertible monthly throughout the entire period, calculate, the value of this investment at the time of withdrawal of t=28 years. no tables, only formulas, please
£12,000 is invested at time t=0. Calculate the value of the fund after 14 years if the nominal rate of interest is 3.7% per annum convertible quarterly for the first 5 years, and thereafter the force of interest is 2.30% per half-year for the remaining years. No tables, only formulas, please
What equal series of payments must be paid into a sinking fund in order toaccumulate each given amount?(a) $1,700 in 10 years at 8% compounded semiannually when payments aresemiannual.(b) $9,000 in 6 years at 3% compounded quarterly when payments arc quarterly.(c) $4,000 in 2 years at 12% compounded monthly when payments are monthly.
Two payments of $13,000 and $6,800 are due in 1 year and 2 years, respectively. Calculate the two equal payments that would replace these payments, made in 9 months and in 4 years if money is worth 10.5% compounded quarterly. Calculate the time period of an investment in a mutual fund that matured to $61,850.12 yielding interest of $11,571.24 at 6.96% compounded monthly. What quarterly compounding nominal interest rate is earned on an investment that doubles in 8.5 years?
Use the sinking fund formula shown to the right to determine the monthly payment needed to accumulate $620,000 with 8% interest are compounded monthly for 32 years. p=Arn1+rnnt−1 The monthly invested payment is
A trust fund with a beginning balance of $24,000 earns interest at 5.0% compounded quarterly. If withdrawals of $3,300 are made at the beginning of every three months, starting 10 years from now, how long will the trust fund last? Round properly. Answer in quarters.

Recommended textbooks for you

Cornerstones of Financial Accounting

Accounting

ISBN:

9781337690881

Author:

Jay Rich, Jeff Jones

Publisher:

Cengage Learning

Financial Accounting Intro Concepts Meth/Uses

Finance

ISBN:

9781285595047

Author:

Weil

Publisher:

Cengage

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Cornerstones of Financial Accounting

Accounting

ISBN:

9781337690881

Author:

Jay Rich, Jeff Jones

Publisher:

Cengage Learning

Financial Accounting Intro Concepts Meth/Uses

Finance

ISBN:

9781285595047

Author:

Weil

Publisher:

Cengage

EBK CONTEMPORARY FINANCIAL MANAGEMENT

Finance

ISBN:

9781337514835

Author:

MOYER

Publisher:

CENGAGE LEARNING - CONSIGNMENT

EBK CFIN

Finance

ISBN:

9781337671743

Author:

BESLEY

Publisher:

CENGAGE LEARNING - CONSIGNMENT

Managerial Accounting

Accounting

ISBN:

9781337912020

Author:

Carl Warren, Ph.d. Cma William B. Tayler

Publisher:

South-Western College Pub

Intermediate Accounting: Reporting And Analysis

Accounting

ISBN:

9781337788281

Author:

James M. Wahlen, Jefferson P. Jones, Donald Pagach

Publisher:

Cengage Learning

SEE MORE TEXTBOOKS