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New Member
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Feb 21, 2009, 07:01 PM
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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
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Ultra Member
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Feb 21, 2009, 07:48 PM
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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
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Ultra Member
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Feb 21, 2009, 07:54 PM
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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.
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Ultra Member
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Feb 21, 2009, 08:06 PM
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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.
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Ultra Member
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Feb 21, 2009, 08:10 PM
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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.
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Ultra Member
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Feb 21, 2009, 08:17 PM
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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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