Suppose that $1,000 is invested at 6% interest compounded continuously. Use the formula A = Pert. (a) How long (to the nearest day) before the value is $1,250? (answer should be in years, days) (b) How long (to the nearest day) before the money doubles? (answer should be in years, days)

Suppose that $1,000 is invested at 6% interest compounded continuously. Use the formula A = Pert. (a) How long (to the nearest day) before the value is $1,250? (answer should be in years, days) (b) How long (to the nearest day) before the money doubles? (answer should be in years, days)

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....

See similar textbooks

Related questions

Q: An investment of $2500.00 earns interest at 8.25% p.a. compounded monthly for 3 years. At that time…

A: Accumulated value is the total value of an investment account which comprises of interest earned,…

Q: If $8000 is invested at 6% compounded continuously, what is the amount after 6 years?

A: Investment=$8000Interest rate=6%Number of years=6

Q: Find the time it takes for $5,200 to double when invested at an annual interest rate of 15%,…

A: We need to use the concept of time value of money (TVM) to solve the question. According to TVM, the…

Q: b1. F = Pert , which assumes continuous compounding, says that the Future value (F) of an amount (P)…

A: Compounding is the process under which the interest is charged on the interest received. Interest is…

Q: Find the time required for an investment of 3000 dollars to grow to 12000 dollars at an interest…

A: GIVEN, pv = $3000 fv = $12000 rate = 4% monthly compounding m = 12

Q: Use the present value formula to determine the amount to be invested now, or the present value…

A: Present Value refers to the value of cash flows today which is to be received at some future time…

Q: Let y be the balance in an account if you deposit $5000 for x years at 4% APR compounded monthly. e)…

A: Amount Deposited (P) =$5000 APR(r) = 4% = 4/12 = 0.3333% Years(n) = 7

Q: What rate of interest, compounded annually, would yield the same return after two years? (Answer in…

A: Information Provided: Earnings in first year = 0% Earnings in second year = 20.7%

Q: An investment pays 10% interest compounded continuously. If money is invested steadily at the rate…

A: Continuous Compounding: It is the maximum limit of the compound interest if it is calculated and…

Q: Suppose that $1,000 is invested at 3% interest compounded continuously. Use the formula A = Pert (a)…

A: Accumulated value is given by A = Pe^(rt) Where, A = 1250 P = 1000 r = 3% t = time =? Therefore,…

Q: 1. (See image), which assumes continuous compounding, says that the Future value (F) of an amount…

A: Compute the amount in savings account when $2,000 is invested in savings account at 3% annual return…

Q: a) A man has invested $5350 in a savings account that pays 12% simple interest. How long will it…

A: Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: ume that time zero is now and the effective interest rate per year is 14%. 1. What is the present…

A: The given problem can be solved using PV function in excel. PV function computes present value for…

Q: How long will it take money to triple itself if invested at (9/100)% compounded quarterly? What is…

A: Interest rate = 9% Present value = 1 Future value of value 1 = 3 Period in years = n Period in…

Q: How much money would you have at the end of 15 years if you initially invested $7,500 at a nominal…

A: Concept. A = P (1 + r)n Where A = amount including compound interest. P = principal amount R = rate…

Q: How long will it take money to double if it is invested at (A) 9% compounded continuously? (B) 11%…

A: Continuous Compounding: A potentially endless number of periods of calculation and reinvested into…

Q: If $650 is invested at 6% compounded (A) Annually, (B) Quarterly, (C) Monthly, what is the amount…

Q: Use the present value formula to determine the amount to be invested now, or the present value…

A: The amount needed now can be calculated with the help of present value function

Q: 1. $30,000 is invested at a compounded yearly interest rate of 6%, with the interest compounded…

A: Since you have asked a question with multiple sub parts, we will solve the first 3 parts for you as…

Q: approximately how many years would it take for an investment to grow fourfold if it were invested at…

A: Given: Rate=11%/4=0.0275Pmt =0Pv =$-1FV =$4

Q: For the following exercise, use the compound interest formula, A(t) = P 1 + r n nt , where…

A: Compound interest formula: where A is the accumulated value P is the invested principal r is the…

Q: If $525$⁢525 is invested at 14%14%, how much money will be in the account after 3030 months? Round…

A: An amount is the total payments received after a period of time for which it is borrowed.

Q: Approximately how many years would it take for an investment to grow fivefold if it were invested…

A: Investment amount (P) = $1 Future value (FV) = $5 Interest rate (r) = 9% Number of compounding per…

Q: How much more interest will be earned if $5000 is invested for 6 years at 7%, compounded…

A: a) 7% compounded continuously Future Value = Present value * e^rt Where r =rate of interest i.e. 7%…

Q: How much would be the accumulated amount if P2, 047,000 is invested in 2 years, 2 months with…

A: Simple Interest is method of Interest computation where interest is simple calculated on initial…

Q: Suppose you have an investment worth $800 and you want it to increase in value by 400%. a) What is…

A: Investment amount = $ 800 Increase in value = 400%

Q: When interest is compounded continuously, the rate of change of the amount x of the investment is…

A: Continuous Compounding interest assumes interest is compounded and added back into the balance an…

Q: How much should be invested now to have $15,000 in six years if interest is 4% compounded quarterly?…

A: Future value required (FV) = $ 15000 Annual interest rate = 4% Quarterly interest rate (R) = 4%/4 =…

Q: uppose that $5000 is invested each quarter, for the next 20 years. what is the future worth if the…

A: An annuity is a sum of series of payments after every year or after every quarter. An annuity can be…

Q: The total amount of money in an account with P dollars invested in it is given by the formula A = P+…

A: Simple interest: It is an interest based on a loan's principal portion.

Q: Suppose an income stream will produce income at a rate of 4000 + 1000t dollars per year for 5 years,…

A: Present value Present value of an amount with continuous compounding. With continuous compounding…

Q: Suppose that an amount in Kina, is invested in a private financial institution, with interest…

A: As we are finding the final amount, that will be in future, thus we will use the future value…

Q: What is the accumulated amount after 5 years of P7,500.00 invested at a rate of 10% per year…

A: As per the guidelines we are required to solve first question only when multiple questions are…

Q: True or false and explain please. The effect of exponential growth is similar to interest…

A: Interest is compensation of investor for time factor of money. Interest is cost of loanable funds in…

Q: How long does it take for an investment to double in value if it is invested at 5% compounded…

A: Assuming Investment = 100 Future value = 2*Investment = 200 Interest rate = 5% Continuous…

Q: How do I work this problem in excel? What will $82,000 grow to be in 11 years if it is invested…

A: Future value formula will be used. where, Rate = 0.67% Nper = 132 periods PV = $82,000

Q: Suppose that $1,000 is invested at 3% interest compounded continuously. Use the formula A = Pert.…

A: In this question we have three parts and we need to answer them one by one.

Q: If you invest $10,000 at 8.125% interest compounded daily, how long will it take for you to…

A: Present value =$10,000 Future value = $15,000 Interest rate = 8.125% compounded daily So, daily…

Q: 2) Suppose you invested $1000 per quarter over a 15 year period. If money earns an annual rate of…

A: First we need to compute future value of sum using FV function in excel. FV function computes future…

Q: Find the time it takes for $5,100 to double when invested at an annual interest rate of 9.9 %6,…

A: Investment amount (P)= $5100 Annual Interest rate (r)= 9.9% compounded continuously Time period to…

Q: Suppose the continuously compounded interest rate this year is 9%, and in subsequent years, itwill…

A: Future value refers to the amount of current investment after a certain time at a certain rate of…

Q: An investment of $2500.00 earns interest at 8.25% p.a. compounded monthly for 3 years. At that time…

A: Given, Present value (PV) = $2,500 Rate of interest (r) = 6% Number of periods compounded quarterly…

Q: If $7000 is invested at 3% compounded continuously, what is the amount after 5 years? The amount…

A: Future value can be referred to as the value of an underlying asset or security at a future date.…

Q: A business is planning to purchase a piece of equipment that will produce a continuous stream of…

A: Here, Cash Flow is 9,000 Interest Rate is 6.65% Compounding is Continuous Compounding Time Period is…

Q: A sum of $5000 is invested at an interest rate of 9% per year, compounded continuously.(a) Find the…

A: Compounding is a technique through which FV of present amount is computed by using appropriate rate.

Q: the table by finding the balance A when $18,000 is invested at rate r for t years, compounded…

A: There is more compounding than more is the effective rate and more is the accumulation of interest…

Question

Suppose that $1,000 is invested at 6% interest compounded continuously. Use the formula

A = Pe^rt.

(a) How long (to the nearest day) before the value is $1,250?

(answer should be in years, days)

(b) How long (to the nearest day) before the money doubles?

(answer should be in years, days)

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

You put $600 in the bank for 3 years at 15%. 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 third year. B. Use the future value of $1 table In Appendix B and verify that your answer is correct.
If an asset declines in value from 5,000 to 3,500 over nine years, what is the mean annual growth rate in the assets value over these nine years?
(1) What is the value at the end of Year 3 of the following cash flow stream if the quoted interest rate is 10%, compounded semiannually? (2) What is the PV of the same stream? (3) Is the stream an annuity? (4) An important rule is that you should never show a nominal rate on a time line or use it in calculations unless what condition holds? (Hint: Think of annual compounding, when INOM = EFF% = IPER.) What would be wrong with your answers to parts (1) and (2) if you used the nominal rate of 10% rather than the periodic rate, INOM/2 = 10%/2 = 5%?
Use the tables in Appendix B to answer the following questions. A. If you would like to accumulate $4,200 over the next 6 years when the interest rate is 8%, how much do you need to deposit in the account? B. If you place $8,700 in a savings account, how much will you have at the end of 12 years with an interest rate of 8%? C. You invest $2,000 per year, at the end of the year, for 20 years at 10% interest. How much will you have at the end of 20 years? D. You win the lottery and can either receive $500,000 as a lump sum or $60,000 per year for 20 years. Assuming you can earn 3% interest, which do you recommend and why?
You want to invest $8,000 at an annual Interest rate of 8% that compounds annually for 12 years. Which table will help you determine the value of your account at the end of 12 years? A. future value of one dollar ($1) B. present value of one dollar ($1) C. future value of an ordinary annuity D. present value of an ordinary annuity
Suppose that $1,000 is invested at 4% interest compounded continuously. Use the formula A = Pert. (a) How long (to the nearest day) before the value is $1,250? years, days (b) How long (to the nearest day) before the money doubles? years, days (c) What is the interest rate (compounded continuously and rounded to the nearest tenth of a percent) if the money doubles in 5 years? %
set up an equation and solve each problem. Suppose that $500 is invested at a certain rate of interest compounded annually for 2 years. If the accumulated value at the end of 2 years is $594.05, find the rate of interest.
a) What would be the accumulated value of ₺ 100.000 in a saving account at 8% per year for 5 years when the interest is compounded? b) What would be the accumulated value of the same amount after 9 years with the same rate but not compounded (simple interest) annually?
When interest is compounded continuously, the amount of money increases at a rate proportional to the amount S present at time t, that is, dS/dt = rS, where r is the annual rate of interest. (a) Find the amount of money accrued at the end of 3 years when $6000 is deposited in a savings account drawing 5 3 4 % annual interest compounded continuously. (Round your answer to the nearest cent.) b) in how many years will the initial sum deposited have doubled?(round to the nearest year) c) use a calculator to compare the amount obtained in part (a) with the amount s=(1 + 1/4(0.0575))^3(4) that is accrued when interest is compounded quarterly. (round your answer to the nearest cent.)
If an investment of $5,000 is made in an account returning 2% ,then how long will it take for the account to have $10,000 if: (a) Interest is compounded monthly? (12 times a year) (b) Interest is compounded continuously?Give your answers rounded to two decimal places.
Suppose $15,000 is invested in an account with an APR of 4.5%. If the interest is compounded annually, how much interest is earned over the first 6 years? If the interest is compounded monthly, how much interest is earned over the first 6 years?
For the following exercise, use the compound interest formula, A(t) = P 1 + r n nt , where money is measured in dollars.After a certain number of years, the value of an investment account is represented by the expression 10,950 1 + 0.03 2 24 . How many years had the account been accumulating interest? yr