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1. a loan of $11 200 due in 5 years, with interest of 4.4%/a compounded quarterly.

2. an investment that will be worth $128 500 in 8 years. The interest rate is 6.5%/a, compounded semi-annually.

 Feb 17, 2021
edited by frosttyfrog  Feb 17, 2021
 #1
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FV = PV (1+ i)n         n is the number of periods    5 yr  x   4 = 20 periods

                                   i = decimal inteest PER PERIOD   = .044/4

                                  PV = present value = loan amount = 11200

                                  FV = futere value

 

FV = 11200 (  1 + .044/4)20 = $ 13939.31                interest earned =  13939.31 - 11200 =..........

 

 

2.)  Same equation with different numbers:

        128500 =  PV (1 +.065/2 )16       Solve for PV

 Feb 17, 2021
edited by ElectricPavlov  Feb 17, 2021

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