Problem 4: Solve each situation separately, where P = principal; r = interest ra
ID: 2717611 • Letter: P
Question
Problem 4:
Solve each situation separately, where P = principal; r = interest rate; t = time in years; I = interest and future value FV =
A) P = $ 10.800; r = 6.50%; t = 7 years; I =?
B) I = $ 1.550; t = 11 months r = 7.75%; P =?
C) P = $ 30.500; r = 6.75%; t = 10; VF =
D) FV = $ 320,000; r = 5.40% compounded monthly; t = 30; P =?
Problem 5:
You want to start a bakery business. For this, you will need a capital of $ 75,000 to start operating. If you have to operate within four years. What sum must now invest 12% quarterly composite, the amount needed to keep and operate your business?
** NOTE** IT IS VERY IMPORTANT TO COMPLETE THE ENTIRE EXERSICE. INCLUDE ALL THE CALCULATIONS, PLEASE, THANK
Explanation / Answer
= 10,800 x(1+0.065)^7
= 10,800 x 1.55399
= 16,783.05
Interest I = FV- PV
= 16,783.05 - 10,800
= 5983.05
PV +I = PV x(1+r)^t
PV +1550 = PV (1+0.075)^(11/12)
PV +1550 = PV x1.06854
PV = 1550/0.06854
= 22614.53
= 30,500 x(1+0.0675)^10
=30500 x1.92167
= 58610.94
PV = FV/ (1+r)^(txm)
= 320,000/(1+0.0045)^(30x12)
= 320,000/ 5.03476
= 63558.14