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1 year ago

Damian invests $5,000 today in an account earning 6% per year. How much is the investment worth in 4 years?

1 answer:

7 0

Based on the fact that Damien invested $5,000 and left it in an account that earns 6% for 4 years, the investment worth would be b. $6,312.38.

<h3>What would be the value of the investment?</h3>

The value of the investment in 4 years is considered to be its future value when looking at it from the present.

Using the rate being earned, the investment amount, and the number of years the investment will be invested, the future value formula is:

Future value = Investment x ( 1 + rate)^ number of years

Solving gives:

= 5,000 x ( 1 + 0.06) ⁴

= 5,000 x 1.06⁴

= 5,000 x 1.26247696

= $6,312.3848

= $6,312.38

In conclusion, the value of Damien's investment after a period of four years at 6% per year comes to $6,312.38.

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<h3>What is meant by self renewal in business?</h3>

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1 year ago

Oftentimes, the socially optimal quantity for a product that imposes external costs on the society is not zero, but something gr

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A much greater marginal cost than marginal benefit.

<h3><u>Explanation:</u></h3>

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3 years ago

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3 years ago

You purchase 4,000 bonds with a par value of $1,000 for $978 each. The bonds have a coupon rate of 7.7 percent paid semiannually

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Answer:

The amount to be received onthe coupon date is $154000.

The amount to be received at bonds maturity is $4154000.

Explanation:

amount received on the next coupon date = 4000*$1000*7.7%*6/12

= $154000

amount to receive when the bonds mature = face value + interest

= 4000*$1000 + $154000

= $4,000,000 + $154000

= $4154000

Therefore, the amount to be received onthe coupon date is $154000 and the amount to be received at bonds maturity is $4154000.

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3 years ago

Which of the following statements is CORRECT?a. An investment that has a nominal rate of 6% with semiannual payments will have a

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Answer:

c. If a loan has a nominal annual rate of 7%, then the effective rate will never be less than 7%

<em>CORRECT</em>

as at least is recive 7% of the investment. If payment are made in shorter period (semiannually, quarterly, etc)

Then the effective rate will be higher, not lower.

Explanation:

a. An investment that has a nominal rate of 6% with semiannual payments will have an effective rate that is smaller than 6%

FALSE the effective rate will be higher as there is compounding effect.

b. The present value of a 3-year, $150 ordinary annuity will exceed the present value of a 3-year, $150 annuity due

FALSE the annuity-due is discounted for one period less, as the payment are made at the beginning of the period therefore; his V is greater.

d. If a loan or investment has annual payments, then the effective, periodic, and nominal rates of interest will all be different

FALSE if it mades annual payments they will be equal

e. The proportion of the payment that goes toward interest on a fully amortized loan increases over time.

FALSE the interest will decrease over time as there is a portion of principal which is being paid each installment

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