A IS sted at an annual interest rate of 2.5%. At the end of 20 years, the total in the two funds is P 10,00 end of 31 years, the amount in Fund A is twice the amount in Fund B. Calculate the to two funds at the end of 10 years. Hint: Let A₁ = P₁(1.03)' and B = P(1.025)' be the AV's of Funds A and B at time t resp

A IS sted at an annual interest rate of 2.5%. At the end of 20 years, the total in the two funds is P 10,00 end of 31 years, the amount in Fund A is twice the amount in Fund B. Calculate the to two funds at the end of 10 years. Hint: Let A₁ = P₁(1.03)' and B = P(1.025)' be the AV's of Funds A and B at time t resp

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

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(1) (D) Fund A is invested at an effective annual interest rate of 3%. Fund B is invested at an effective
annual interest rate of 2.5%. At the end of 20 years, the total in the two funds is P 10,000. At the
end of 31 years, the amount in Fund A is twice the amount in Fund B. Calculate the total in the
two funds at the end of 10 years.
Hint: Let A₁ = P₁(1.03)' and B, = P(1.025)' be the AV's of Funds A and B at time t respectively.
Then use the equations, A20 + B20 = P10,000 and A31 = 2B31 to determine the values of PA and
PB.

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