Explanation Given information: The monthly interest rate is 6 % for 4 years and the compound amount is $ 20 , 000 , 000 . Formula used: Compounding period 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. The number of periods provided by the present value table is smaller than the number of periods of an investment, 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 obtained above which represent half, or values as close as possible to half, of the required periods. Step 2. Now multiply the two table factors from the step 1 to get the new factor. Step 3. Now round the obtained new factor to the five decimal places. Calculation: Consider the compound amount $ 20 , 000 , 000 and monthly 6 % interest over 4 years 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 periods ( n ) = Term of investments ( years ) × m = 4 × <

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

Concept explainers

Unitary Method

The word “unitary” comes from the word “unit”, which means a single and complete entity. In this method, we find the value of a unit product from the given number of products, and then we solve for the other number of products.

Speed, Time, and Distance

Imagine you and 3 of your friends are planning to go to the playground at 6 in the evening. Your house is one mile away from the playground and one of your friends named Jim must start at 5 pm to reach the playground by walk. The other two friends are 3 …

Profit and Loss

The amount earned or lost on the sale of one or more items is referred to as the profit or loss on that item.

Units and Measurements

Measurements and comparisons are the foundation of science and engineering. We, therefore, need rules that tell us how things are measured and compared. For these measurements and comparisons, we perform certain experiments, and we will need the experime…

Videos

Question

Chapter 11.II, Problem 19RE

To determine

To calculate: The Company’s initial investment to accumulate the required amount of money $20,000,000 and monthly interest of 6% over 4 years.

Expert Solution & Answer

Want to see the full answer?

Check out a sample textbook solution

See solution

Chapter 11.II, Problem 18RE

Chapter 11.II, Problem 20RE

Students have asked these similar questions

Please solve and explain

i need help please hand written

Not use ai please

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 Company’s initial investment to accumulate the required amount of money $ 20 , 000 , 000 and monthly interest of 6 % over 4 years.

Solution Summary: The author calculates the compounding period by dividing the annual, or nominal, rate by the number of periods per year.

Concept explainers

Videos

To calculate: The Company’s initial investment to accumulate the required amount of money $20,000,000 and monthly interest of 6% over 4 years.

Want to see the full answer?

Chapter 11 Solutions