Answered: Sara invests $1,000 at a rate of 5%…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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How is a Compounding Period determined?
You purchased a winning ticket for a $5 million lottery which pays $500,000 immediately and the rest in 9 annual installments. A finance company called and offered you $3 million for it. Would you accept the offer if the rate is 10%
Compound Interest. Determine the future value of $700 which is invested at10% interest which is compounded early after 8 years.
Using the data given below, select the equation that will correctly calculate the future value of the cash flow at the end of Year 6. Use an interest rate of i =4% Year Income Expense 0 $10,000 1 $1000 2 $900 3 $800 4 $700 5 $600 6 $500 Group of answer choices {10,000 – 1,000(P/A, 4%, 6) -100(P/G, 4%, 5)} (P/F, 4%, 6) {10,000 – 1,000(F/A, 4%, 6) +100(F/G, 4%, 6)} (F/P, 4%, 6) {10,000 – 1,000(P/G, 4%, 6) +100(P/A, 4%, 6)} (F/P, 4%, 6) 10,000 – {1,000(P/A, 4%, 6) +100(P/G, 4%, 6)} (P/F, 4%, 6) {10,000 – 1,000(P/A, 4%, 6) +100(P/G, 4%, 6)} (F/P, 4%, 6)
Which of the following is the preferable interest rate for investing your money?(i) 12% Compounded Semi-annually(ii) 12% Compounded Quarterly(iii) 12% Compounded Monthly(iv) 12% Compounded Daily
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You sit down with the world's least helpful financial advisor who never tells you the future value of any investments but will give you the other info you need. Which investment option gives you the most money at the end of 10 years? Options: (A) Investing $1,000 at the beginning of each year with an annual interest rate of 8.5%. Interest compounds annually. (B) Investing $83.33 each month with an annual interest rate of 8%. Interest compounds monthly. (C) Investing $10,000 today with an annual interest rate of 5%. Interest compounds monthly.
Some time ago, youput £500 into a bank account for a “rainy day." Since then, the bank has been paying you 1 percent per month, compounded monthly. Today, you checked the balance, and found it to be £708.31. Howlong ago did you deposit the £500?
Suppose that $5,000 is placed in a bank account at the end of each quarter over the next 9 years. What is the future worth at the end of 9 years when the interest rate is 14 compounded at the given intervals? (a) Quarterly (b) Monthly (c) Continuously
$500 is invested in an account each month. If the account pays 5% interest rate, compounded monthly, what is the account balance after 3 years? Show work.
You want to invest an amount today that will last for 5 years and allow you to withdraw $555 at the end of each 6-month period. You earn 4% APR compounded semiannually on your investment. How much do you need to invest today to achieve your goal?
A certain amount of money doubles after 9 years. Determine its effective interest.

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Sara invests $1,000 at a rate of 5% simple annual interest over 4 years. How much interest will she earn? Group of answer choices $1020 $1050 $200 $50