I know my answers are wrong.. Please ignore..

Question 1: (10 Points)

Calculate the future value of an investment of $1,000, after 6 months, earning 6% APR, compounded monthly, by compounding manually. 1,000x(1+0.06)^.5 = 1,029.56

Reminder: Be sure to show your work, and to calculate the period interest before solving.

Question 2: (10 Points)

Find the future value of a $150,000 Certificate of Deposit that pays compounded interest *every six months* at the rate of 4% per year. The CD has a term of 5 years. 1+I

1.04040(150,000)=156,060

Calculate the FV (Future Value) using the “Future Value or Compound Amount of $1.00” table in your textbook.

a) Calculate the FV (Future Value) using the formula: FV = P(1 + R)^{N}

^{$156,000}

b) How much interest was earned on the investment?

Question 3: (10 Points)

$6,000

You inherit $200,000 and decide to invest it for 28 days compounded daily at 6% annual interest. After the 28 days, you are going to invest your new found money in a startup business.

a) How much interest is earned on this investment?

5.11169(100%)=0.0511169

0.0511169(200,000)=10,223.38

$10,223.38 was earned

b) How much money will you have to invest in the startup after the 28 days?

$200,000+10,223.38=$210.223.38

How much money must be invested into an account paying 6% annually, compounded annually, to have $500,000 in 25 years when I retire?

a) Calculate the PV (Present Value) using the “Present Value of $1.00” table in your textbook.

b) Calculate the PV (Present Value) using the formula: PV = FV / (1 +R)^{N}

c) How much interest did you earn over the life of the investment?

Subject | Business |

Due By (Pacific Time) | 05/24/2015 10:20 am |

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