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  • Feb 21, 2009, 07:01 PM
    volora
    Time Value of Money
    I used the BAII PLUS Financial calculator to figure out the following answers and I want to make sure if it's right or not. Please check for me. Any feedback would greatly appreciated.

    1. Assume Bill Jones invested $3,137.84 into an account exactly one year ago. The account has an interest of 8.4% p.a. How much does Bill have in his account today (that is, exactly one year after the initial deposit)? (Round your answer to the nearest cent)

    Answer: 340.41

    2. Assume Jed Gerbil invested $12,617 into an account exactly two years ago. The account has an interest of 11.4% p.a. How much does Jed have in his account today (that is, exactly two years after the initial deposit)?

    Answer: 15,657.65

    3. Assume Sheryl Jenkins wants to accumulate $532.15 in two years. She currently has $465.09 to invest. What interest rate must she earn on her investment (that is, if she deposits $465.09 today) to have $532.15 exactly two years from today?

    Answers: 1.15

    4. Your neighbor is asking you to invest in a venture that will double your money in 3 year(s). Compute the return the he is promising you?

    Answers: 648.18

    5. You want to withdraw $39,616 from your account at the end of one year and $50,997 at the end of the second year. How much should you deposit in your account today so that you can make these withdrawals? Your account pays 7 percent p.a.

    Answers: 53,307.29
  • Feb 21, 2009, 07:48 PM
    ROLCAM

    1. Assume Bill Jones invested $3,137.84 into an account exactly one year ago. The account has an interest of 8.4% p.a. How much does Bill have in his account today (that is, exactly one year after the initial deposit)? (Round your answer to the nearest cent)

    Answer: 340.41
    INCORRECT! Should be $3,401.42
  • Feb 21, 2009, 07:54 PM
    ROLCAM
    2. Assume Jed Gerbil invested $12,617 into an account exactly two years ago. The account has an interest of 11.4% p.a. How much does Jed have in his account today (that is, exactly two years after the initial deposit)?

    Answer: 15,657.65
    This is correct assuming COMPOUND INTEREST.
    Calculating it with SIMPLE INTEREST the answer would have been different.
    You must indicate what type of interest.
  • Feb 21, 2009, 08:06 PM
    ROLCAM
    3. Assume Sheryl Jenkins wants to accumulate $532.15 in two years. She currently has $465.09 to invest. What interest rate must she earn on her investment (that is, if she deposits $465.09 today) to have $532.15 exactly two years from today?

    Answers: 1.15
    This answer is incorrect.
    With COMPOUND INTEREST $465.09 invested
    At 1.15% per annum would give you $578.21.
    And not $532.15.
    So the rate must be lower than 1.15.
    Try again.
    With these type of questions you must indicate
    What type of INTEREST you are using.
  • Feb 21, 2009, 08:10 PM
    ROLCAM
    4. Your neighbor is asking you to invest in a venture that will double your money in 3 year(s). Compute the return the he is promising you?

    Answers: 648.18
    This answer is incorrect.
    The question is asking for a rate of return.
    This should be expressed in a percentage per annum.
    Again you must indicate whether you mean
    COMPOUND or SIMPLE interest.
  • Feb 21, 2009, 08:17 PM
    ROLCAM
    LET US TEST YOUR ANSWER 11

    5. You want to withdraw $39,616 from your account at the end of one year and $50,997 at the end of the second year. How much should you deposit in your account today so that you can make these withdrawals? Your account pays 7 percent p.a.

    Answers: 53,307.29

    53,307.29 @ 1.07 = 57,038.49

    57,038.49 - 39,616.00 = 17,422.49

    17,422.49 @ 1.07 = 18,642.06

    This amount is insufficient to withdraw the
    stated second amount.
    CONCLUSION :- You answer is incorrect.
    Please try again.

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