Question: Beverly Hills started a paper route on January 1. Every three months, she deposits $550 in her bank account, which earns 8 percent annually but is compounded quarterly. Four years later, she used the entire balance in her bank account to invest in an investment at 7 percent annually. How much will she have after three more years?
The future value of the investment after the three years is $12,809.83.
Payment (PMT) = $550
Periods for quarterly compounding (n1) = 16 (4 years*4 quarters)
Interest Rate for quarterly compounding (i1) = 2% (8%/4)
Re-investment period (n2) = 3
Re-investment rate (i2) = 7%
Question: Morgan Jennings, a geography professor, invests $50,000 in a parcel of land that is expected to increase in value by 12 percent per year for the next five years. He will take the proceeds and provide himself with a 10-year annuity. Assuming a 12 percent interest rate, how much will this annuity be?
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