Answered: $14,000 is invested for 8 years at an…

$14,000 is invested for 8 years at an annual simple interest rate of 16%. (a) How much interest will be earned?$ (b) What is the future value of the investment at the end of the 8 years?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter5: The Time Value Of Money

Section: Chapter Questions

Problem 27P

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Question

$14,000 is invested for 8 years at an annual simple interest rate of 16%.

(a) How much interest will be earned?
$

(b) What is the future value of the investment at the end of the 8 years?

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(a) Following is the formula of interest that will be earned during certain period:

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Calculate the interest that will be earned as follows:

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(b) Following is the formula of future value of investment at simple interest rate:

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Calculate the investment's future value as follows:

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