ou wish to have an investment that will bring about $50 000 in ten years, and the rate of return is 8% per annum. Required: a. In term of time value of money, what is the amount of $50,000 represent? b. How much do you need to invest now if the rate is compounded annually (to the nearest dollar)? c. If you have $50,000 now and put the sum into a bank account that pays 5% per year. How much will you have in 8 years if the rate is compounded semiannually, quarterly, monthly and daily (to the nearest dollar)?

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 wish to have an investment that will bring about $50 000 in ten
years, and the rate of return is 8% per annum. Required:
a. In term of time value of money, what is the amount of $50,000 represent?
b. How much do you need to invest now if the rate is compounded annually
(to the nearest dollar)?
c. If you have $50,000 now and put the sum into a bank account that pays
5% per year. How much will you have in 8 years if the rate is compounded semiannually, quarterly, monthly and daily (to the nearest dollar)?

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