An investor deposits $100 into his credit union account that pays interest at the rate of 3.25% per year (payable at the end of each year). He leaves the money and all accrued interest in the account for 7 years. How much will he have at the end of the 7 years?
An investor deposits $100 into his credit union account that pays interest at the rate of 3.25% per year (payable at the end of each year). He leaves the money and all accrued interest in the account for 7 years. How much will he have at the end of the 7 years?
Chapter4: Time Value Of Money
Section: Chapter Questions
Problem 28P
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Transcribed Image Text:1. An investor deposits $100 into his credit union account that pays interest at the rate of
3.25% per year (payable at the end of each year). He leaves the money and all accrued
interest in the account for 7 years. How much will he have at the end of the 7 years?
2. What is the future value in SEVEN years if you receive $300 in two years and $500 at the
end of five years? Assume an annual compound rate of 8.5%.
3. What is the value of $2000after one year, if bank compounding half yearly and offered rate
is 10%?
4. What is the value of $2000 after one year if bank compounding quarterly and offered rate is
10%?
5. What is the value of $2000after one year if bank compounding monthly and offered rate is
10%?
6. What is the present value of $700 to be received in two equal installments ($350 each), two
years and five
years
from today, when the annual discount rate is 10%?
7. Suppose Capitol Federal Bancorp offers a certificate of deposit that pays $10,000 in five
years for exchange for $8,000 today. What interest rate is Capitol Federal Bancorp offering?
8. Suppose Bank One offers a certificate of deposit that pays $5,000 in four years for exchange
for $4,000 today. What interest rate is Bank One offering?
9. How many years will take $10,000 to grow to $20,000 if bank offered rate is 10%?
10. How many years will take $25,000 to grow to $120,000 if bank offered rate is 18%?
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