Explanation Given Information: An investment with compound amount $ 100 , 000 made for 50 years at 5 % interest compounded annually. Formula used: Compounding period can be defined as the duration or length of time from one interest payment to the next. If an investment made for 4 years at 6 % compounded annually (once per year) then it would have four compounding period which can be calculated by formula given below: Compounding periods = Term of investments ( years ) × m Here, m is the period per year. The interest rate per period can be calculated by dividing the annual, or nominal, rate by the number of periods per year, Interest rate per period = Nominal rate Period per year The present value (principal) can be calculated by the formula given below: Principal = Table factor × Compound amount In present value table 11-2, the table factor is the intersection of the rate-per-period column and the number-of-periods row is the present value of $ 1 at compound interest. When the number of periods of an investment is greater than the number of periods provided by the present value table, then compute a new table factor by following below steps: Step 1. For the defined interest rate per period, evaluate the two table factors that represent half, or values as close as possible to half, of the periods required. Step 2. Multiply the two table factors from step 1 to form the new factor. Step 3. Round the new factor to five decimal places. Calculation: Consider the compound amount $ 100 , 000 made for 50 years at 5 % interest compounded annually and solve as shown below: Since, the variables-compound amount, time period (years), nominal rate and interest compounded are given; therefore, the compounding period can be calculated as below: Compounding period = Years × Period per year = 50 × 1 = 50 Calculate the interest rate per period

Contemporary Mathematics For Business & Consumers, Brief Edition, Loose-leaf Version

8th Edition

ISBN: 9781305867192

Author: Robert Brechner, Geroge Bergeman

Publisher: South-Western College Pub

See similar textbooks

Videos

Question

Chapter 11, Problem 14AT

To determine

To calculate: The new table factor and the present value (principal) that has compound amount $100,000 made for 50 years at 5% interest compounded annually.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 11, Problem 13AT

Chapter 11, Problem 15AT

Students have asked these similar questions

Problem 3 Ten measurements of an impurity concentration in a process stream have been recorded. The sample mean is 87ppm and the sample standard deviation is ±13 ppm. Consider the null hypothesis that the impurity concentration has a true mean μo. Part A: Desired Probability that the sample mean will satisfy the null hypothesis: P = 0.4 Part B: Using the chart below, determine the4 highest value of the true mean that will lead to the null hypothesis being accepted with the probability assigned in Part A 1.00 0.90 0.80 0.70 0.60 0.50 0.40 Probability of accepting Ho 0.30 0.20 0.10 1 ° 0 30 40 50 75 100 10 0.2 0.4 0.6 0.8 1.0 1.2 =2.5 1.4 1.6 1.8 2.0 2.2 2.4 2.6 d 2.8 3.0 3.2

Problem 2 A chemical reactor system has been designed to perform optimally when operated at 150°C. The hypothesis test that will be used for evaluating the operating temperature will rely on 10 successive temperature measurements and will assign a 95% confidence interval for the result. The reactor system is judged to have a standard deviation of ±3°C. Part A: Actual operating temperature of the process T[°C] = 152.90 Part B: What is the probability that the hypothesis test for operating at 150°C described above will give a false acceptance (i.e., a type II error)?

Problem 1 An airport is served with an average of 10 departures per day to your desired destination. However, all these flights leave at random times. You are trying to decide how long you are willing to wait to catch the next flight after you arrive at airport. Part A: Acceptable waiting time: T [min] = 78min Part B: What is the probability there will be exactly one departure during this waiting time? Part C: What is the probability there will be exactly no departure during this waiting time? Part D: Which calculation (B or C) should you use to make your decision to wait or leave? Why?

Chapter 11 Solutions

Contemporary Mathematics For Business & Consumers, Brief Edition, Loose-leaf Version

Ch. 11.I - Gail Parker invested $10,000 at 6% interest...Ch. 11.I - Jenny Chao invested $20,000 at 6% interest...Ch. 11.I - Prob. 3TIE Ch. 11.I - Jill Quinn invested $7,000 in a certificate of...Ch. 11.I - Prob. 5TIE Ch. 11.I - Prob. 1RE Ch. 11.I - For the following investments, find the total...Ch. 11.I - For the following investments, find the total...Ch. 11.I - Prob. 4RE Ch. 11.I - Prob. 5RE

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, subject and related others by exploring similar questions and additional content below.

The new table factor and the present value (principal) that has compound amount $ 100 , 000 made for 50 years at 5 % interest compounded annually.

Solution Summary: The author calculates the new table factor and the present value (principal) that has compound amount 100,000 made for 50 years at 5% interest compounded annually.

Videos

To calculate: The new table factor and the present value (principal) that has compound amount $100,000 made for 50 years at 5% interest compounded annually.

Want to see the full answer?

Chapter 11 Solutions