Periods 7 8 9 10 11 12 13. 14 15 16 17 18 19 20 21 22 23 Caroline 4.50% 5.00% 5.50% 6.00% 6.50% 7.00% 7.50% 8.00% 8.50% 9.00% 1.3609 1.4071 1.4547 1.5036 1.5540 1.6058 1.6590 1.7138 1.7701 1.8280 1.4221 1.4775 1.5347 1.5938 1.6550 1.7182 1.7835 1.8509 1.9206 1.9926 1.4861 1.5513 1.6191 1.6895 1.7626 1.8385 1.9172 1.9990 2.0839 2.1719 1.5530 1.6289 1.7000 1.7908 1.8771 1.9672 2.0610 2.1589 2.2610 2.3674 1.6229 1.7103 1.8021 1.8983 1.9992 2.1049 2.2156 2.3316 2.4532 2.5804 1.6959 1.7959 1.8832 2.0122 2.1291 2.2522 2.3818 2.5182 2.6617 2.8127 1.7722 1.8856 1.9868 2.1329 2.2675 2.4098 2.5604 2.7196 2.8879 3.0658 2.5785 2.7524 2.9372 3.3134 3.3417 3.3997 3.6425 2.0224 2.1829 3.6887 3.9703 2.1134 2.2920 1.8519 1.9799 2.0961 2.2609 2.4149 1.9353 2.0789 2.2114 2.3966 2.5718 2.7590 2.9589 3.1722 2.3553 2.5404 2.7390 2.9522 3.1808 3,4259 2,4848 2.6928 2.9170 3.1588 3.4194 3.7000 4.0023 4.3276 2.2085 2.4066 2.6215 2.8543 3.1067 3.3799 3.6758 3.9960 4.3425 4.7171 2.3079 2.5270 2.7656 3.0256 3.3086 3.6165 3.9515 4.3157 4.7116 5.1417 2.4117 2.6533 2.9178 3.2071 3.5236 3.8697 4.2479 4.6610 5.1120 5.6044 2.5202 2.7860 3.0782 3.3996 3.7527 4.1406 4.5664 5.0338 5.5466 6.1088 2.6337 2.9253 3.2475 3.6035 3.9966 4.4304 4.9089 5.4365 6.0180 6.6586 2.7522 3.0715 3.4262 3.8197 4.2564 4.7405 5.2771 5.8715 6.5296 7.2579 On Caroline's first birthday, her parents deposited $5,000 into a savings account that earns a fixed rate of 4.50% and compounds interest annually. I Caroline's 20th birthday, her account will have accumulated (Hint: Round your answer to the nearest cent.). What-If Scenario If Caroline's parents had waited until her 10th birthday to make their initial deposit of $5,000 into the same account, by Caroline's 20th birthday, the balance would have been (Hint: Round your answer to the nearest cent.)
Periods 7 8 9 10 11 12 13. 14 15 16 17 18 19 20 21 22 23 Caroline 4.50% 5.00% 5.50% 6.00% 6.50% 7.00% 7.50% 8.00% 8.50% 9.00% 1.3609 1.4071 1.4547 1.5036 1.5540 1.6058 1.6590 1.7138 1.7701 1.8280 1.4221 1.4775 1.5347 1.5938 1.6550 1.7182 1.7835 1.8509 1.9206 1.9926 1.4861 1.5513 1.6191 1.6895 1.7626 1.8385 1.9172 1.9990 2.0839 2.1719 1.5530 1.6289 1.7000 1.7908 1.8771 1.9672 2.0610 2.1589 2.2610 2.3674 1.6229 1.7103 1.8021 1.8983 1.9992 2.1049 2.2156 2.3316 2.4532 2.5804 1.6959 1.7959 1.8832 2.0122 2.1291 2.2522 2.3818 2.5182 2.6617 2.8127 1.7722 1.8856 1.9868 2.1329 2.2675 2.4098 2.5604 2.7196 2.8879 3.0658 2.5785 2.7524 2.9372 3.3134 3.3417 3.3997 3.6425 2.0224 2.1829 3.6887 3.9703 2.1134 2.2920 1.8519 1.9799 2.0961 2.2609 2.4149 1.9353 2.0789 2.2114 2.3966 2.5718 2.7590 2.9589 3.1722 2.3553 2.5404 2.7390 2.9522 3.1808 3,4259 2,4848 2.6928 2.9170 3.1588 3.4194 3.7000 4.0023 4.3276 2.2085 2.4066 2.6215 2.8543 3.1067 3.3799 3.6758 3.9960 4.3425 4.7171 2.3079 2.5270 2.7656 3.0256 3.3086 3.6165 3.9515 4.3157 4.7116 5.1417 2.4117 2.6533 2.9178 3.2071 3.5236 3.8697 4.2479 4.6610 5.1120 5.6044 2.5202 2.7860 3.0782 3.3996 3.7527 4.1406 4.5664 5.0338 5.5466 6.1088 2.6337 2.9253 3.2475 3.6035 3.9966 4.4304 4.9089 5.4365 6.0180 6.6586 2.7522 3.0715 3.4262 3.8197 4.2564 4.7405 5.2771 5.8715 6.5296 7.2579 On Caroline's first birthday, her parents deposited $5,000 into a savings account that earns a fixed rate of 4.50% and compounds interest annually. I Caroline's 20th birthday, her account will have accumulated (Hint: Round your answer to the nearest cent.). What-If Scenario If Caroline's parents had waited until her 10th birthday to make their initial deposit of $5,000 into the same account, by Caroline's 20th birthday, the balance would have been (Hint: Round your answer to the nearest cent.)
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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Transcribed Image Text:Periods
7
8
9
10
11
12
13.
14
15
16
17
18
19
20
21
22
23
Caroline
Interest Factors
What-If Scenario
8.50%
1.7701
5.00%
4.50%
5.50%
6.00% 6.50% 7.00%
7.50% 8.00%
1.3609
1.4071 1.4547
1.5036
1.5540
1.6058
1.6590 1.7138
1.4221
1.4775
1.5347
1.5938
1.6550
1.7182
1.7835 1.8509
1.9206
1.4861 1.5513
1.6191
1.6895
1.7626
1.8385
1.9172
1.9990
2.0839
1.5530
1.6289
1.7000 1.7908
1.8771
1.9672
2.0610
2.1589
2.2610
1.6229
1.8021
1.7103
1.8983 1.9992 2.1049
2.2156
2.3316
2.4532
2.1291 2.2522
2.3818
2.5182
2.6617
1.6959 1.7959
2.0122
1.8832
1.7722 1.8856 1.9868 2.1329 2.2675 2.4098
2.4149 2.5785
2.5604
2.8879
2.7196
3.0658
1.8519 1.9799 2.0961 2.2609
2.7524 2.9372
3.3134
3.3417
1.9353 2.0789
3.1722
3.3997
3.6425
2.0224 2.1829
3.1808 3.4259 3.6887
3.9703
2.1134 2.2920
2.4848
2.2085 2.4066
3.1067 3.3799
3.9960 4.3425 4.7171
2.3079 2.5270
2.2114 2.3966 2.5718
2.3553 2.5404 2.7390
522
2.6928 2.9170 3.1588 3.4194 3.7000 4.0023 4.3276
2.6215 2.8543
3.6758
2.7656 3.0256 3.3086 3.6165 3.9515 4.3157
2.4117 2.6533 2.9178 3.2071 3.5236 3.8697 4.2479 4.6610 5.1120 5.6044
2.5202 2.7860 3.0782 3.3996 3.7527 4.1406 4.5664 5.0338 5.5466 6.1088
2.6337 2.9253 3.2475 3.6035 3.9966 4.4304 4.9089 5.4365 6.0180 6.6586
2.7522 3.0715 3.4262 3.8197 4.2564 4.7405 5.2771 5.8715 6.5296 7.2579
4.7116 5.1417
2.7590 2.9589
9.00%
1.8280
1.9926
2.1719
2.3674
2.5804
2.8127
On Caroline's first birthday, her parents deposited $5,000 into a savings account that earns a fixed rate of 4.50% and compounds interest annually. By
Caroline's 20th birthday, her account will have accumulated S
(Hint: Round your answer to the nearest cent.)
If Caroline's parents had waited until her 10th birthday to make their initial deposit of $5,000 into the same account, by Caroline's 20th birthday, the
balance would have been
(Hint: Round your answer to the nearest cent.)
Transcribed Image Text:How much have you saved and how much more do you need?
The interest earned on a savings deposit is a function of four variables
The amount of money held on deposit (PV)
• The method to be used in calculating interest-for example, simple versus compound interest
The interest rate applied to the amount on deposit (1)
• The frequency with which the account's interest is earned-for example, annually, semiannually, quarterly, monthly, or daily
Another important variable is the amount of time during which the funds are held in the savings account (n).
These variables and their interaction determine the account's balance at a particular point in time.
How do these variables work together to determine an account's balance?
Which of the following formulas would you choose to calculate the future balance on an account that earns compound interest?
O FV = (PV x i)"
O FV = PV x (1 + i)
O FV = PV x (1 + i)"
OFV = PVX (1+i) x1
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