# 1A, 5-4A, 5-5A, and 5-6A - 73481

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## smarttutor

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1A. (Compound interest) To what amount will the following investments accumulate?
a. \$5,000 invested for 10 years at 10 percent compounded annually
b. \$8,000 invested for 7 years at 8 percent compounded annually
c. \$775 invested for 12 years at 12 percent compounded annually
d. \$21,000 invested for 5 years at 5 percent compounded annually

5-4A. (Present value) What is the present value of the following future amounts?
a. \$800 to be received 10 years from now discounted back to the present at 10 percent
b. \$300 to be received 5 years from now discounted back to the present at 5 percent
c. \$1,000 to be received 8 years from now discounted back to the present at 3 percent
d. \$1,000 to be received 8 years from now discounted back to the present at 20 percent

5-5A. (Compound annuity) What is the accumulated sum of each of the following streams of payments
a. \$500 a year for 10 years compounded annually at 5 percent
b. \$100 a year for 5 years compounded annually at 10 percent

5-6A. (Present value of an annuity) What is the present value of the following annuities?
a. \$2,500 a year for 10 years discounted back to the present at 7 percent
b. \$70 a year for 3 years discounted back to the present at 3 percent
c. \$280 a year for 7 years discounted back to the present at 6 percent
d. \$500 a year for 10 years discounted back to the present at 10 percent

Solution Description

1A. (Compound interest) To what amount will the following investments accumulate?   Principle  Interest  Periods   Interest   Total Amount
a. \$5,000 invested for 10 years at 10 percent compounded annually   \$   5,000.00 10%                          10  \$          5,000.00  \$   10,000.00
b. \$8,000 invested for 7 years at 8 percent compounded annually   \$   8,000.00 8%                            7  \$