A student invests $1000 in a bank account that pays an interest rate of 3.25% compounded monthly. a) Develop a formula which will calculate the value of the investment (V) with respect to the number of compounding periods (n). b) Hence, or otherwise, use the formula you developed in part a) to calculate: • The value of the investment after 10 years • The time taken for the investment to reach $10 000

A student invests $1000 in a bank account that pays an interest rate of 3.25% compounded monthly. a) Develop a formula which will calculate the value of the investment (V) with respect to the number of compounding periods (n). b) Hence, or otherwise, use the formula you developed in part a) to calculate: • The value of the investment after 10 years • The time taken for the investment to reach $10 000

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter11: Capital Budgeting Decisions

Section: Chapter Questions

Problem 6MC: You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years....

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You put $250 in the bank for S years at 12%. A. If interest is added at the end of the year, how much will you have in the bank after one year? Calculate the amount you will have in the bank at the end of year two and continue to calculate all the way to the end of the fifth year. B. Use the future value of $1 table in Appendix B and verity that your answer is correct.
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