How much money is needed to invest today to have a lump sum of $100,000 in 40 years if the interest rate is 12.5 percent compounded annually?

If $100 is invested at the end of each month for 18 yrs into an account paying 10.5 percent compounded monthly, how much will your investment accumulate at the end of the 18 yrs?

A $40,000,000 lottery win is to be paid out over 25 yrs with a payment of $1,600,000 at the end of each year with an interest rate of 6 percent compounded annually. What lump sum today would equal the present value of this 25-year annuity?

If $1,000 is invested today into an account earning 5.75 percent interest compounded monthly, how much is it worth in 10 yrs?

If $20,000 is borrowed with an interest rate of 6.5 percent compounded monthly for 3-year (36 month) loan, how much is the monthly payment?

How much money is needed to invest today to have a lump sum of $10,000 in 8 years if the available interest rate is 10 percent compounded monthly?

If $50,000 is borrowed with an interest rate of 7.0 percent compounded monthly for a 5-year (60 month) loan, how much is the monthly payment?

If $10,000 is invested today into an account earning 8.5 percent interest compounded monthly, how much is it worth in 5 yrs?

If $250 is invested each month for 8 yrs into an account paying 6.5 percent compounded monthly, to what amount will your investment accumulate at the end of the 8 years?

Solution Summary

The solution computes present value, future value, annuity, monthly payment and investment which are compounded monthly.

5-1A. (Compound interest) To what amount will the following investments accumulate?
a. $5,000 invested for 10 years at 10 percent compoundedannually
b. $8,000 invested for 7 years at 8 percent compoundedannually
c. $775 invested for 12 years at 12 percent compoundedannually
d. $21,000 invested for 5 years at 5 percent

5-1A. (Compound interest) To what amount will the following investments accumulate?
a. $5,000 invested for 10 years at 10 percent compoundedannually
b. $8,000 invested for 7 years at 8 percent compoundedannually
c. $775 invested for 12 years at 12 percent compoundedannually
d. $21,000 invested for 5 years at 5 percent com

5-1B. (Compound interest) To what amount will the following investments accumulate?
a. $4,000 invested for 11 years at 9 percent compoundedannually
b. $8,000 invested for 10 years at 8 percent compoundedannually
c. $800 invested for 12 years at 12 percent compoundedannually
d. $21,000 invested for 6 years at 5 percent com

The following situations involve the application of the time value of money concept.
1. Janelle Carter deposited $9,750 in the bank on January 1, 1991, at an interest rate of 11% compoundedannually. How much has accumulated in the account by January 1, 2008?
2. Mike Smith deposited $21,600 in the bank on January 1, 1998. On

Here are the exercises: Can you also briefly explain why with 2-3 sentences, Thank you I am trying to better understand it.
1.
(Compound interest) To what amount will the following investments accumulate? Why you think this way?
a. $5,000 invested for 10 years at 10 percent compoundedannually
b. $8,000 invested for 7 years

1. Future Value. What is the future value of
a. $800 invested for 14 years at 11 percent compoundedannually?
b. $210 invested for 8 years at 9 percent compoundedannually?
c. $650 invested for 12 years at 8 percent compoundedannually?
2. Present Value. What is the present value of
a. $803 to be received 18 years from

12 Assuming you will leave your money in the bank for the entire year, which of the following interest rate alternatives would you prefer?
a. 11.75 % compounded semi-annually
b. 11.75 % compounded quarterly
c. 11.45 % compounded weekly
d. 11.45 % compoundedannually
e. None of the above or insufficient information

1. I invested $15,000 today in a fund that earns 8% compoundedannually. To what amount will the investment grow in 3 years?
2. To what amount would the investment grow in 3 years if the fund earns 8% compounded semiannually?
3. I need $25,000 in 4 years. What amount must be invested today if his investment earns 12% comp

Find the present value and the amount of interest earned. Use the present value of a dollar table.
Round to the nearest cent as needed.
Amount needed $12,900
Time (years) 6
Interest 8%
Compoundedannually
Present value $ ____________
Interest earned $____________