c. You put $2,750 into an account earnings 4% interest compounded QUARTERLY. How much will be in this account at the end of 4 YEARS? d. In question “b." above, if you leave he money in the account for one more YEAR, how much more interest will you earn in that additional year (Year 5)?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Need D and C

please use IT-84 calculator 

what is 

N = I%= PV= PMT=FV= What are we solving for?

Thank you

 

### Financial Mathematics: Compound Interest Scenarios

a. **Investment Future Value Problem:**
   You need $17,000 in five years, but you only have $12,000 now. What interest rate must you invest the money at, assuming the interest is compounded annually?

b. **Present Value Calculation:**
   You have a $20,000 note payable, due in three years. How much must you deposit into a savings account today to pay off the debt on time, assuming the account earns 3% interest compounded annually?

c. **Quarterly Compound Interest:**
   You deposit $2,750 into an account earning 4% interest compounded quarterly. What will the account balance be at the end of 4 years?

d. **Extended Investment Interest:**
   Using the scenario in question "b," if you extend the investment for an additional year (Year 5), how much more interest will you earn?

e. **Doubling Investment Timeframe:**
   How long will it take to double $2,000 to $4,000 when invested in an account earning 7% interest compounded annually?
Transcribed Image Text:### Financial Mathematics: Compound Interest Scenarios a. **Investment Future Value Problem:** You need $17,000 in five years, but you only have $12,000 now. What interest rate must you invest the money at, assuming the interest is compounded annually? b. **Present Value Calculation:** You have a $20,000 note payable, due in three years. How much must you deposit into a savings account today to pay off the debt on time, assuming the account earns 3% interest compounded annually? c. **Quarterly Compound Interest:** You deposit $2,750 into an account earning 4% interest compounded quarterly. What will the account balance be at the end of 4 years? d. **Extended Investment Interest:** Using the scenario in question "b," if you extend the investment for an additional year (Year 5), how much more interest will you earn? e. **Doubling Investment Timeframe:** How long will it take to double $2,000 to $4,000 when invested in an account earning 7% interest compounded annually?
Expert Solution
Step 1

Solution c:

Amount invested (PV) = $2,750

Quarterly interest rate (I) = 4%/4 = 1%

Nos of quarterly periods (N) = 4*4 = 16

Future value (FV) = P * (1+i)^n = $2,750 *(1+0.01)^!6

= $2,750 * 1.172579

= $3,225

 

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