50.1K

Verified Solution

Link Copied!

Compute the value for each of the following independent situations.

Note: Use Excel or a financial calculator. Round your answers to $2$ decimal places.

To save for their new child's college education, a couple places $$25,000$ in an account. What

amount will accumulate in the account at the end of $18$ years, assuming an interest rate of $7\mathrm{.}25\%$

compounded annually?

An individual has just inherited a piece of land. The individual plans to hold the land for three years

and then expects the land to sell for $$200,000.$ What is the value today of inheriting the land,

assuming an interest rate of $8\mathrm{.}5\%$ compounded annually?

To save money for the down payment on a house, an individual places $$5,000$ in an account at the

end of each quarter. What amount will accumulate in the account at the end of four years, assuming

an interest rate of $9\mathrm{.}75\%$ compounded quarterly?

To purchase a car, an individual agrees to pay $$800$ at the end of each month for the next six years.

What is the cost of the car today, assuming an interest rate of $6\mathrm{.}5\%.$

To help repay debt that will come due in $12$ years, a company places $$20,000$ in an account at the

beginning of each six$-$month period. What amount will accumulate in the account at the end of $12$

years, assuming an interest rate of $4\mathrm{.}5\%$ compounded semiannually?

To rent office space, a company signs a lease agreeing to pay $$2,500$ at the beginning of each

month for the next three years. What is the cost today of the lease, assuming an interest rate of $5\%$

compounded monthly?

Answer & Explanation Solved by verified expert

See Answer