Question

(Future value)  You are hoping to buy a house in the future and recently received an inheritance of

​$24,000.

You intend to use your inheritance as a down payment on your house.a.  If you put your inheritance in an account that earns

8

percent interest compounded​ annually, how many years will it be before your inheritance grows to

​$31,000​?

b.  If you let your money grow for

9.5

years at

8

percent​,

how much will you​ have?c.  How long will it take your money to grow to

​$31,000

if you move it into an account that pays

3

percent compounded​ annually? How long will it take your money to grow to

​$31,000

if you move it into an account that pays

11

percent​?

d.  What does all this tell you about the relationship among interest​ rates, time, and future​ sums?

a.  If you put your inheritance in an account that earns

8

percent interest compounded​ annually, how many years will it be before your inheritance grows to

​$31,000​?

nothing

years ​ (Round to one decimal​ place.)

Answer 1

SEE THE IMAGE. ANY DOUBTS, FEEL FREE TO ASK. THUMBS UP PLEASE

- 2x Insert Delete Format Σ AutoSum : A Fill Sort & 2 Clear Filter Editing Find & Select Cells CP ca CR A PV, FV, ANNUITY (Autosaved) - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View Add-Ins % Cut Calibri 11 A A = = = V Wrap Text General E Copy Paste Merge & Center - $ % 48. Conditional Format Cell Format Painter Formatting as Table Styles Clipboard Font Alignment Number Styles CP721 D C - ck a CM CN co 721 722 PRESENT VALUE 24000 [INHERITANCE] 723 RATE 8% 724 FUTURE VALUE 31000 725 NO OF YEARS 3.3 [=NPER(CL723,-CL722,CL724)] 726 727 PRESENT VALUE 24000 728 RATE 8% 729 NO OF YEARS 9.5 730 FUTURE VALUE 49858.24 (=FV(CL728, CL729,,-CL727)] 731 732 c (1) PRESENT VALUE 24000 733 RATE 3% 734 FUTURE VALUE 31000 735 NO OF YEARS 8.7 [=NPER(CL733,,-CL732,CL734)] 736 737 c(2) PRESENT VALUE 24000 738 RATE 11% FUTURE VALUE 31000 740 NO OF YEARS 2.5 (=NPER(CL738,,-CL737, CL739)] 739 741 p CAP STRU VALUE profit margin loan with points LOCK BOX DILUTION DOLLAR COST AVG EXPONPER APR CPI ear FVA pva 52 53 0 v, fv, annuity ferences: X262 STATE56 57 0 BOU 120% Red _ ...B 9 . * . *OENG 30-11-2019

- 2x PV, FV, ANNUITY (Autosaved) - Microsoft Excel (Product Activation Failed) File Home Insert Page Layout Formulas Data Review View Add-Ins % Cut AutoSum - A Calibri -11AA === Dr Wrap Text General E Copy Fill Paste D - BIU - A- E E E Merge & Center $ % 8.. Conditional Format Cell Insert Delete Format Sort & Format Painter Find & Formatting as Table Styles 2 Clear Filter Select Clipboard Font Alignment Number Styles Cells Editing CQ755 CICI CK CL CM C N CO CP cQ R 741 This tells us that as rate of interest increases, time taken to achieve desired amount (future amount) decreases 743 Higher the rate, faster compounding, lesser time to achieve the target amount (future value) and vice versa 745 746 747 S 742 744 748 749 750 751 752 753 754 755 756 757 758 759 760 761 p CAP STRU VALUE profit margin loan with points LOCK BOX DILUTION DOLLAR COST AVG EXPONPER APR CPI ear FVA pva 52 53 0 v, fv, annuity ferences: X262 STATE56 57 0 BOU 120% Red -_- H . A . * ENG 05:13 30-11-2019