1. What balance will be in an account at the end of 10 years, if € 3 500 is deposited today and the account earns 3,5% annual interest, compounded a) annually? b) semi-annually? c) quarterly? d) monthly?
1. What balance will be in an account at the end of 10 years, if € 3 500 is deposited today and the account earns 3,5% annual interest, compounded a) annually? b) semi-annually? c) quarterly? d) monthly?
Chapter5: The Time Value Of Money
Section: Chapter Questions
Problem 31P
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| 1. What balance will be in an account at the end of 10 years, if € 3 500 is deposited today and the account earns 3,5% annual |
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| using TVM functions | mannully | |||||||
| Principal | Interest rate | Time period | Compounding frequency | Total number of compounding periods | Interest per period | Total Interest earned | Final balance = FV | Final balance = FV |
| (EUR) | (as a decimal) | (number of years) | (times per year) | (as a decimal) | (EUR) | (EUR) | (EUR) | |
| 3,500 | 0.035 | 10 | 1 | 10 | 0.0350 | 1,437.10 | 4,937.10 | 4,937.10 |
| 3,500 | 0.035 | 10 | 2 | 20 | 0.0175 | 1,451.72 | 4,951.72 | 4,951.72 |
| 3,500 | 0.035 | 10 | 4 | 40 | 0.0088 | 1,459.18 | 4,959.18 | 4,959.18 |
| 3,500 | 0.035 | 10 | 12 | 120 | 0.0029 | 1,464.21 | 4,964.21 | 4,964.21 |
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