Question

Bus Econ 10.6.19 E Question Help A company must pay a $304,000 settlement in 5 years. (a) What amount must be deposited now at 4% compounded semiannually to have enough money for the settlement? (b) How much interest will be earned? (c) Suppose the company can deposit only $100,000 now. How much more will be needed in u years? (d) Suppose the company can deposit $100,000 now in an account that pays interest continuously. What interest rate would they need to accumulate the entire $304,000 in 5 years? nus (a) The amount that must be deposited is $ (Do not round until the final answer. Then found to the nearest hundredth as needed.)

Answer 1

A company est pay a $ 304.000 settlement in 5 years = gear R-4% , compacteel Semiconally Gives Amount - $604000 P = ? = Preincipal R= 4% = 0.04 245 - 10 [A=P ( 1 + 2 ht & SPA (14 2 ) - 2x P. 304000 (1+0.04) - 204000 (1+0.02) - P = -10 304000 (1.00) - 304000x 0.82034309 >> P $249385.883 b) Interestlik Annount (A) – Principal (A) S A-P 304000 - 949395,88 = $51614.11G 2 T >> T = $54614.1.16 , tas, R=4% -0.04 , -a P = $100 000 >> A = P(1 - 5 sean ) 10 2) = 100000 x 1.2199 A - 100000 CH 0.02 V = 100000 >> A = # 121499.442 MOTO = $ (204000 - 121599.442) - -> More needed $182100.558 182100.558 1 P = $ 100,000 . A $ 304COO, t = 5 Force contenus Erlorest Calculation Le can be the formula TAP el ex 304000 = 100000 é Rx => 304000 5R - e - 3.04 R = 22.a Taking to on both side. In (3.04) = In ER 1.11855 = 0.aga R = 0.292 = 2 - SR = 1. 1118595 >> RS 5 e 100 000