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Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447

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BuyFindarrow_forward

Contemporary Mathematics for Busin...

8th Edition
Robert Brechner + 1 other
ISBN: 9781305585447
Textbook Problem

Solve the following word problems by using Table 11-1 or 11-2. When necessary, create new table factors. Round dollars to the nearest cent and percents to the nearest hundredth of a percent.

Over the past 10 years, you’ve made the following investments:

Deposited $10,000 at 8 % compounded semiannually in a 3-year certificate of deposit.

After 3 years, you took the maturity value (principal and interest) of that CD and added another $5,000 to buy a 4-year, 6 % certificate compounded quarterly.

When that certificate matured, you added another $8,000 and bought a 3-year, 7 % certificate compounded annually.

a. What was the total worth of your investment when the last certificate matured?

b. What is the total amount of compound interest earned over the 10-year period?

(a)

To determine

To calculate: The total worth of the investment when the certificate matured from the following investment;

1: Deposition of $10,000 at 8% compounded semiannually in a 3-year certificate of deposit.

2: After 3 years, the maturity value was extracted and another $5,000 to buy a 4-year, 6% certificate compounded quarterly.

3: When the certificate matured another $8,000 were and a 3-year, 7% certificate a 3-year, 7% certificate compounded annually was bought.

Explanation

Given information:

A set of investments,

1: Deposition of $10,000 at 8% compounded semiannually in a 3-year certificate of deposit.

2: After 3 years, the maturity value was extracted and another $5,000 to buy a 4-year, 6% certificate compounded quarterly.

3: When the certificate matured another $8,000 were and a 3-year, 7% certificate a 3-year, 7% certificate compounded annually was bought.

Formula used:

Formula to calculate future amount on an investment.

Future Value=Principal(1+R100n)nt.

Where, R is the rate of interest, n is the compounding of interest and t is the time period.

Calculation:

Since, the initial investment is $10,000. Therefore, the amount after 3 years at 8% semiannually compound interest will be as mentioned below.

FV=10,000(1+82100)6=10,000(208200)6=12653.19

Since, $5000 were added to the amount $12653

(b)

To determine

To calculate: The total amount of compound interest earned over the period of 10 years, if the provided investment is;

1: Deposition of $10,000 at 8% compounded semiannually in a 3-year certificate of deposit.

2: After 3 years, the maturity value was extracted and another $5,000 to buy a 4-year, 6% certificate compounded quarterly.

3: When the certificate matured another $8,000 were and a 3-year, 7% certificate a 3-year, 7% certificate compounded annually was bought.

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Chapter 11 Solutions

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Sect-11.I P-6RESect-11.I P-7RESect-11.I P-8RESect-11.I P-9RESect-11.I P-10RESect-11.I P-11RESect-11.I P-12RESect-11.I P-13RESect-11.I P-14RESect-11.I P-15RESect-11.I P-16RESect-11.I P-17RESect-11.I P-18RESect-11.I P-19RESect-11.I P-20RESect-11.I P-21RESect-11.I P-22RESect-11.I P-23RESect-11.I P-24RESect-11.I P-25RESect-11.I P-26RESect-11.I P-27RESect-11.I P-28RESect-11.I P-29RESect-11.I P-30RESect-11.I P-31RESect-11.I P-32RESect-11.I P-33RESect-11.I P-34RESect-11.I P-35RESect-11.I P-36RESect-11.I P-37RESect-11.I P-38RESect-11.I P-39RESect-11.I P-40RESect-11.II P-6TIESect-11.II P-7TIESect-11.II P-8TIESect-11.II P-1RESect-11.II P-2RESect-11.II P-3RESect-11.II P-4RESect-11.II P-5RESect-11.II P-6RESect-11.II P-7RESect-11.II P-8RESect-11.II P-9RESect-11.II P-10RESect-11.II P-11RESect-11.II P-12RESect-11.II P-13RESect-11.II P-14RESect-11.II P-15RESect-11.II P-16RESect-11.II P-17RESect-11.II P-18RESect-11.II P-19RESect-11.II P-20RESect-11.II P-21RESect-11.II P-22RESect-11.II P-23RESect-11.II P-24RESect-11.II P-25RESect-11.II P-26RESect-11.II P-27RESect-11.II P-28RESect-11.II P-29RECh-11 P-1CRCh-11 P-2CRCh-11 P-3CRCh-11 P-4CRCh-11 P-5CRCh-11 P-6CRCh-11 P-7CRCh-11 P-8CRCh-11 P-9CRCh-11 P-10CRCh-11 P-11CRCh-11 P-12CRCh-11 P-13CRCh-11 P-14CRCh-11 P-1ATCh-11 P-2ATCh-11 P-3ATCh-11 P-4ATCh-11 P-5ATCh-11 P-6ATCh-11 P-7ATCh-11 P-8ATCh-11 P-9ATCh-11 P-10ATCh-11 P-11ATCh-11 P-12ATCh-11 P-13ATCh-11 P-14ATCh-11 P-15ATCh-11 P-16ATCh-11 P-17ATCh-11 P-18ATCh-11 P-19ATCh-11 P-20ATCh-11 P-21ATCh-11 P-22ATCh-11 P-23ATCh-11 P-24ATCh-11 P-25ATCh-11 P-26ATCh-11 P-27ATCh-11 P-28ATCh-11 P-29ATCh-11 P-30ATCh-11 P-31ATCh-11 P-32ATCh-11 P-33ATCh-11 P-34ATCh-11 P-35ATCh-11 P-36ATCh-11 P-37ATCh-11 P-38ATCh-11 P-39AT

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