Question

If you invest $2,500 today, $3,600 in 2 years, $4,500 in 5 years, and $1,600 in 7 years, how much will be in the bank 15 years from today if interest is 8.5% compounded annually?

2. Charlie hopes to accumulate $83,000 in a savings account in 10 years. If he wishes to make a single deposit today and the bank pays 3 percent compounded annually on deposits of this size, how much should Charlie deposit in the account?

3. If $4329 is borrowed today and $8,955 is paid back in 11 years, what interest rate compounded annually has been earned?

4. With interest at 9% compounded annually, what is the fewest number of years (integer-valued) required for money to double in magnitude?

5. Your company seeks to take over a competitor. Your company’s offer for the competing business is $2,725,000 in cash upon signing the agreement followed by 14 annual payments of $390,000 starting one year later. The time value of money is 9.00%. What is the present worth of your company’s offer?

6. The plan was to leave $5,100 on deposit in a savings account for 14 years at 5.5% interest compounded annually. It became necessary to withdraw $2,200 at the end of the 4th year. How much will be on deposit at the end of the 14-year period?

7. Each and every year $2500 is invested at 12% compound interest. What is the value of the investment portfolio immediately after the 20th deposit?

8. You invest $14,000 per year for 40 years and earn 2% annually on the investment. What Excel function will calculate the value in the investment account immediately after the 40th deposit?

Answer 1

Answering the first question as per Chegg policy

Question 1: If you invest $2,500 today, $3,600 in 2 years, $4,500 in 5 years, and $1,600 in 7 years, how much will be in the bank 15 years from today if interest is 8.5% compounded annually?

Answer: The investments of $2,500 today, $3,600 in 2 years, $4,500 in 5 years, and $1,600 in 7 years will have 15 years, 13 Years, 10 Years and 8 Years to the maturity date. Given that, the annual compounding interest rate is 8.5%,

We know that, The future value of investment = FV = P x (1+R)ⁿ

Future value of total investment = [2500 x (1.085¹⁵)] + [3600 x (1.085¹³)] + [4500 x (1.085¹⁰)] + [1600 x (1.085⁸)]

= 8499.36 + 10396.55 + 10174.43 + 3072.97

= $32143.30