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# Value of Investment When Interest is Compounded

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1. If a nurse deposits \$1,000 today in a bank account and the interest is compounded annually at 12%, what will be the value of this investment:

a) five years from now?
b) ten years from now?
c) fifteen years from now?
d) twenty years from now?

#### Solution Summary

The attached MS Excel spreadsheet contains detailed instructions for calculating the value of an investment when the applied interest is compounded,

\$2.19

## Compounded Interest

1. Find the present value of \$2000 to be received 2 years from now discounted at 3% semiannually.

2. How many years will it take to triple your money in an investment that pays 7% interest compounded quarterly?

3. What is the monthly payment on a \$150,000, 30-year mortgage at a 6.5% interest rate?

4. If you borrow \$2000 and pay back \$2600 in 5 years, what annual interest rate are you paying?

5. If you invest \$12,000 at an expected return of 4% compounded quarterly, what be the value of your investment in 6 years?

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