Determine the amount that must be deposited now at compound interest to provide the desired sum for each of the

Question:

Determine the amount that must be deposited now at compound interest to provide the desired sum for each of the following:

1. Amount to be invested for 10 years at 6% per annum, compounded semiannually, to equal $17,000.

2. Amount to be invested for 21/2 years at 8% per annum, compounded quarterly, to equal $5,000.

3. Amount to be invested for 15 years at 12% per annum, compounded semiannually, then reinvested at 16% per annum, compounded quarterly, for five more years to equal $25,000.

4. Amount to be invested at 8% per annum, compounded semiannually for three years, then $5,000 more added and the entire amount reinvested at the same rate for another three years, compounded semiannually, to equal $12,500.


Compound Interest
Compound interest (or compounding interest) is interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan. Thought to have originated in 17th century Italy, compound...

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Related Book For  answer-question

Intermediate Accounting

ISBN: 978-0324592375

17th Edition

Authors: James D. Stice, Earl K. Stice, Fred Skousen

Question Details
Chapter # 6
Section: Module: Time Value
Problem: 3
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Question Posted: January 28, 2012 07:06:09