1. Christopher wants to invest $6200 in a retirement fund that guarantees a return of 9% annually using continously compounded i
ntrest. How much will he have after 20 years? a) $6002.82
b) $25164.10
c) $37507.81
d) $556342.35
2. You invest $2,600 into a savings account with a 4.25% annual interest rate that compounds interest quarterly. Determine the balance on the account after 5 years.
a) $3766.54
b) $3211.99
c) $3980.50
d) $4560.60
3. You invest $2,600 into a savings account with a 4.25% annual interest rate that compounds interest quarterly. Determine the balance on the account after 50 years.
a) $21,526.87
b) $22,998.70
c) $20,450.10
d) $24,548.33
4. Stock Texas has a price of $156 per share when Bond Austin has a price of $23 per bond. Use an equation modeling the inverse variation between the stock and bond prices to predit the price of stock Texas when bound austin is worth the following: $68.74
a) $59.33
b) $48.115
c) $57.75
d) $52.20
5. What will be your total investment from an annuity of $500 per year compounded continuously earning 8% for 6 years?
1. Continuously compounded formula is given by: A=Pe^rt Thus given: P=$6200, r=0.09, t=20 years: A=6200e^(0.09*20) A=37,507.81
Answer: c] $37507.81
2. Compound interest formula is given by: A=p(1+r/100n)^(nt) where: n=number of terms, p=principle, t=time, r=rate Plugging the values in the formula we get: A=2600(1+4.25/4*100)^(4*5) simplifying this we get: A=$3211.99
Answer: b)$3211.99
3. Using the formula from (2) we have: A=P(1+r/100n)^nt plugging in the values we get: A=2600(1+4.25/400)^(50*4) Simplifying the above we get: A=$21526.87
Answer: A] $21,526.87
4. The price of stock when the bond is worth $68.74 will be: let the bond price be B and Stock price be S thus S=k/B where k is the constant of proportionality thus k=SB hence when S=$156 and B=$23 then K=156*23 K=3588 thus S=3588/B hence the value of S when B=$68.74 thus S=3588/68.74 B=52.19668~52.20
Answer: d] $52.20
5. Continuously compounded annuity is given by:
FV =CF×[(e^rt-1)/(e^r-1)] plugging in the values we get: FV=500×[(e^(6*0.08)-1)/(e^0.06-1)] simplifying this we get: FV=$3698.50
