Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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Question

Transcribed Image Text:Step 1: Given Value
Initial Investment = c = $155,000
Compound = yearly
Interest rate=i = 21%
Time = n = 7 years
Step 2: calculation
Future Value = c*(1+r)^n
= 155,000*(1 + 0.21)^7
= 155,000 * 3.79749833583
= 588,612.242054
= $588,612.24
Solution
Thus, the amount of the investment after 7 years would be $588,612.24

Transcribed Image Text:SOLVE STEP BY STEP IN DIGITAL FORMAT
1. What is the amount of an investment for $155,000 at a compound interest rate of 21% per
year in 7 years?
Formulas Compound interest
Annual compounding
M=C(1 + i)"
1 = Cni
M = C(1 + i)
Fractional capitalization
M-C{1+4)*
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