Answer:
$224,174
Explanation:
Note : I have uploaded the full question below :
The Principle P that is required can be calculated from the given data though discounting future cash flows as follows :
FV = $1,000,000
r = 7½%
t = 20 × 12 = 240
P/yr = 12
Pmt = $0
PV = ?
Using a Financial Calculator to input the values as shown above, the PV would be $224,174 . Thus, the principal P that must be invested must be $224,174.
Answer:
r = 9.86%
Explanation:
The formula for calculating the future value of an invested amount yielding a compound interest is given by:
where:
FV = future value = $16,000
PV = present value = $10,000
r = interest rate = ?
n = number of compounding period per year = 1
t = time in years = 5
∴
dividing both sides by 10,000
to remove the power of 5, we have to take the 5th root of both sides:
Using your calculator:
1.09856 = 1 + r
∴ r = 1.09856 - 1 = 0.09856
r = 0.0986 = 9.86%
∴ r = 9.86%
Answer:
Pure discount
Explanation:
Cindy is taking a pure discount type of loan. A pure discount loan is the promise to pay a certain sum of money in the future in exchange for borrowing money today. Cindy gets money today and repays a single lump sum at a future date. A pure discount loan is where the principal is paid back at a future date without any periodic interest payments