# Compound Interest

5-1B. (Compound interest) To what amount will the following investments accumulate?

a. $4,000 invested for 11 years at 9 percent compounded annually

b. $8,000 invested for 10 years at 8 percent compounded annually

c. $800 invested for 12 years at 12 percent compounded annually

d. $21,000 invested for 6 years at 5 percent compounded annually

5-2B. (Compound value solving for n) How many years will the following take?

a. $550 to grow to $1,043.90 if invested at 6 percent compounded annually

b. $40 to grow to $88.44 if invested at 12 percent compounded annually

c. $110 to grow to $614.79 if invested at 24 percent compounded annually

d. $60 to grow to $78.30 if invested at 3 percent compounded annually

5-3B. (Compound value solving for i) At what annual rate would the following have to be invested?

a. $550 to grow to $1,898.60 in 13 years

b. $275 to grow to $406.18 in 8 years

c. $60 to grow to $279.66 in 20 years

d. $180 to grow to $486.00 in 6 years

5-4B. (Present value) What is the present value of the following future amounts?

a. $800 to be received 10 years from now discounted back to the present at 10 percent

b. $400 to be received 6 years from now discounted back to the present at 6 percent

c. $1,000 to be received 8 years from now discounted back to the present at 5 percent

d. $900 to be received 9 years from now discounted back to the present at 20 percent

#### Solution Preview

Please see the attached file.

Compound Interest

5-1B. (Compound interest) To what amount will the following investments accumulate?

a. $4,000 invested for 11 years at 9 percent compounded annually

FV = PV(1 + r)n where PV is the present value

FV is the future value

r is the discount rate

n is the period

FV = 4,000(1 + 0.09)11

FV = 10,321.71

b. $8,000 invested for 10 years at 8 percent compounded annually

Then you can replace the information into the formula to find the answer.

FV = 17,271.40

c. ...

#### Solution Summary

This solution is comprised of a detailed explanation to answer to what amount will the investments accumulate.