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Effective Rate and Present Value of Bonds

Find the accumulated amount A if $3100.00 is invested at the interest rate of 7.855%/year compounded daily for 12 years.

Find the effective rate corresponding to a 3.95%/year compounded daily.

Find the present value of $75,000 due in 5 yr at 9.3%/year compounded monthly.

David owns $30,000 of 15-yr public bonds. The bonds pay interest every 3 months at the rate of 7.75%/year (simple interest).

a) How much interest will David receive from the bonds every three months

b) How much interest will David receive over the life of the bonds?

Anthony invested a sum of money five years ago in a savings plan that has since paid interest at the rate of 7.65%/yr compounded quarterly. His investment is now worth $22,289.22. How much did Anthony originally invest?

A utility company in a western city of the United States expects the consumption of electricity to increase by 6.55% per year during the next two decades. If consumption does increase at this rate, find the amount by which the utility company will have to increase its generating capacity to meet the needs of the area 20 years from now.

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Solution Summary

This provides examples of working with interest, including effective rate, present value, bonds, and investments.

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