a) In how many years will a single investment of $1,000 made now, increase to $2,000 if the interest rate is 3% peryear?b) A savings certificate costing $80 now will pay $113.48 in 6 years. What is the effective annual interest rate ifcompounding takes place monthly? And what is the nominal annual interest rate compounded monthly?c) How much money would be accumulated 18 years from now, if an equal amount of money is invested at the endof each year, and if over 30 years the amount of money accumulated would amount to $200,000 and the interestrate is expected to average 4% over the entire time?

Information Provided: Present value = $1000 Future value = $2000 Interest rate = 3% NOTE: As…

Answered: a) In how many years will a single…

a) In how many years will a single investment of $1,000 made now, increase to $2,000 if the interest rate is 3% per year?

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter4: Managing Your Cash And Savings

Section: Chapter Questions

Problem 7FPE: Calculating interest earned and future value of savings account. If you put 6,000 in a savings...

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Question

a) In how many years will a single investment of $1,000 made now, increase to $2,000 if the interest rate is 3% per
year?
b) A savings certificate costing $80 now will pay $113.48 in 6 years. What is the effective annual interest rate if
compounding takes place monthly? And what is the nominal annual interest rate compounded monthly?
c) How much money would be accumulated 18 years from now, if an equal amount of money is invested at the end
of each year, and if over 30 years the amount of money accumulated would amount to $200,000 and the interest
rate is expected to average 4% over the entire time?

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