A company must pay a $309,000 settlement 3 years. (a) What amount must be deposited now at 6% compounded semiannually to have enough money for the settlement? (b) How much interest will be earned? (c) Suppose the company can deposit only $200,000 now. How much more will be needed in 3 years?

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
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A company must pay a $309,000 settlement in 3 years.
(a) What amount must be deposited now at 6% compounded semiannually to have enough money for the settlement?
(b) How much interest will be earned?
(c) Suppose the company can deposit only $200,000 now. How much more will be needed in 3 years?
(d) Suppose the company can deposit $200,000 now in an account that pays interest continuously. What interest rate
would they need to accumulate the entire $309,000 in 3 years?
(a) The amount that must be deposited is $.
(Do not round until the final answer. Then round to the nearest hundredth as needed.)
(b) The amount of interest earned will be $
(Do not round until the final answer. Then round to the nearest hundredth as needed.)
(c) The additional amount needed in 3 years will be $
(Do not round until the final answer. Then round to the nearest hundredth as needed.)
(d) The company will need an interest rate of %.
(Do not round until the final answer. Then round to the nearest hundredth as needed.)
Transcribed Image Text:A company must pay a $309,000 settlement in 3 years. (a) What amount must be deposited now at 6% compounded semiannually to have enough money for the settlement? (b) How much interest will be earned? (c) Suppose the company can deposit only $200,000 now. How much more will be needed in 3 years? (d) Suppose the company can deposit $200,000 now in an account that pays interest continuously. What interest rate would they need to accumulate the entire $309,000 in 3 years? (a) The amount that must be deposited is $. (Do not round until the final answer. Then round to the nearest hundredth as needed.) (b) The amount of interest earned will be $ (Do not round until the final answer. Then round to the nearest hundredth as needed.) (c) The additional amount needed in 3 years will be $ (Do not round until the final answer. Then round to the nearest hundredth as needed.) (d) The company will need an interest rate of %. (Do not round until the final answer. Then round to the nearest hundredth as needed.)
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