Can someone answer this please I need it ASAP
1 answer:
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Answer:
a) You should invest $6941.90 today.
b) The effective annual interest rate is 11%.
c) t is approximately 6.
Step-by-step explanation:
These are compound interest problems. The compound interest formula is given by:
Where A is the amount of money, P is the principal(the initial sum of money), r is the interest rate(as a decimal value), n is the number of times that interest is compounded per unit t and t is the time the money is invested or borrowed for.
a) How much would you invest today to have $9500 in 8 years if the effective annual rate of interest is 4%?
Here, we want to find the value of P when .
.
You should invest $6941.90 today.
b) Suppose that an investment of $5750 accumulates to $11533.20 at the end of 13 years, then the effective annual interest rate is i= ?
Here, we have that , and we want to find the value of i, that is r on the formula above the solutions.
The effective annual interest rate is 11%.
c) At an effective annual rate of interest of 5.3%, the present value of $7425.70 due in t years is $3250. Determine t.
Here, we have that and we have to find t. So
We have that:
log_{a}a^{n} = n
So
t is approximately 6.