Question

Mary needs $9000 in 7 years. What amount can she deposit at the end of each quarter at 6% interest compounded quarterly so she will have her $9000?

Answer 1

Part I:
As a financial planner a client comes to you for investment advice. After meeting with him and understanding his needs, you offer him the following two investment options:

Option 1 (refer to section on Mathematics of Finance in your text.): Invest $23,000 in a savings account at 4.25% interest compounded quarterly.

Option 2 (refer to section on Mathematics of Finance in your text): Invest into an ordinary annuity where $5,000 is deposited each year into an account that earns 6.6% interest compounded annually.

SPREADSHEET:

Set up the formula for compound interest for Option 1 and the formula for Future Value of an Annuity for Option 2 in an Excel spreadsheet to calculate the amount earned at the end of 5 years.

Answer 2

what is the future value of $500 in a bank account for 10 years at 10% percent compounded bimonthly