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A. Two years ago, you opened an investment account and deposited $6,000. One year ago, you added...

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Finance

A.

Two years ago, you opened an investment account and deposited$6,000. One year ago, you added another $2,100 to the account.Today, you are making a final deposit of $8,000. How much will youhave in this account 3 years from today if you earn a 14.10 percentrate of return?

B.

How much more current value does a perpetuity of $250 a yearhave as compared to an annuity of $250 a year for 50 years given aninterest rate of 8.5 percent?

C.

What is the present value of an annuity due if the payments are$71 a month for 72 months at a monthly interest rate of 1.5percent?

Answer & Explanation Solved by verified expert
3.9 Ratings (500 Votes)
Deposit years Interest rate FV factor FV of deposit 6000 5 141 1933874212 1160325 2100 4 141 1694894138 355928 8000 3 141 1485446221 1188357 Total 2704609 After 3 years balance in the account will be 2704609 We need to find PV of both investments Perpetuity is equal amount of cash flow that is    See Answer
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Transcribed Image Text

A.Two years ago, you opened an investment account and deposited$6,000. One year ago, you added another $2,100 to the account.Today, you are making a final deposit of $8,000. How much will youhave in this account 3 years from today if you earn a 14.10 percentrate of return?B.How much more current value does a perpetuity of $250 a yearhave as compared to an annuity of $250 a year for 50 years given aninterest rate of 8.5 percent?C.What is the present value of an annuity due if the payments are$71 a month for 72 months at a monthly interest rate of 1.5percent?

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