Question: Computing Future and Present Value Under Different Investment Assumptions 1. If we invest $30,000 in an account at 4% interest compounded annually, what is the

Computing Future and Present Value Under Different Investment Assumptions


1. If we invest $30,000 in an account at 4% interest compounded annually,

what is the account balance at the end of five years?



2. We wish to accumulate an investment fund of $120,000 at the end of six years

by making a single deposit now. What amount must we deposit now assuming



annual compounding of 6%?



3. If we deposit $750,000 in an investment fund on January 1, which earns interest

of 8% compounded annually, what annual payment can we withdraw each year over



the next 20 years? Assume that our first withdrawal is at the end of the first year.



4. If we make a payment of $1,725 each month starting today into a fund that earns 6%,

how many months does it take to accumulate $100,000? Assume monthly



compounding of interest.


Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!