Question

If the single amount of $4500 is to be received in 3 years and discounted at 8%, its present value is

$3873.

$3572.

$3883.

$3653.

If $41500 is put in a savings account paying interest of 7% compounded annually, what amount will be in the account at the end of 9 years?

$76296

$34378

$68265

$67645

Answer 1

If the single amount of $4500 is to be received in 3 years and discounted at 8%, its present value is

$4500 x PVIF ( 8%,3) = $4500 x 0.7938 = $3572

If $41500 is put in a savings account paying interest of 7% compounded annually, what amount will be in the account at the end of 9 years?

Amount = Principal ( 1 + rate / no. of times compounded) ^ (no. of times compounded x period)

Amount = $41500 ( 1 + 0.07 / 1 ) ^ (1 x 9) = 41500 x 1.83845 = $76296