Compound Interest - 19729

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studentlance

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  • From: Business, Marketing
  • Posted on: Fri 26 Jul, 2013
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Request Description

The $2,000 cost-of-living pay increase to all hourly employees and a $4,000 increase to all software analysts with salaries less than $55,000. However, he wants to do this in 2 years.

 

 He wants you to give him two options (you do not have to recommend an option).

Option 1: How much would he have to invest today in a single lump sum at a 6% annual interest rate compounded quarterly to have sufficient funds to execute his plan?

Option 2: How much would he have to invest in equal monthly payments at a 3% annual interest rate compounded monthly to have sufficient funds to execute his plan?

Because the CEO wants to increase salaries for all hourly employees and software analysts, there needs to be a count of the employees in each category.

Part 2: Use the funding you calculated in Part 1A and the appropriate compound interest formulas you learned in business algebra to calculate the investment amounts for options 1 and 2. Show your calculations in any empty area on the worksheet created in Part 1.

Hints:

Excel Functions:

PV – Returns the present value of a future amount

PMT – Calculates the payment necessary to accumulate a future amount

Compound Interest Formulas:

A = P(1 + i)n

FV = PMT ×

(1 + i)n Â– 1

 


 

i

 

 

 

 

First

Last

Full Name

Location

Job Title

Type

 Salary

 Manager

Miao

Yin

Yin, Miao

Kobe, Japan

Administrative Assistant

Hourly

 $      26,000.00

 Ku, Wah

Gillian

Forster

Forster, Gillian

Seattle, Washington

Administrative Assistant

Hourly

 $      27,500.00

 Joubert, Gil

Gil

Joubert

Joubert, Gil

Seattle, Washington

CEO

Salaried

 $  1,25,000.00

 

Jack

Otega

Otega, Jack

Kobe, Japan

Customer Service Representative

Hourly

 $      30,000.00

 Ku, Wah

Mai

Linh

Linh, Mai

Kobe, Japan

Customer Service Representative

Hourly

 $      34,000.00

 Ku, Wah

Kathy

Chang

Chang, Kathy

Kobe, Japan

Customer Service Representative

Hourly

 $      28,500.00

 Ku, Wah

Solution Description

Liteman, Cal

Law, Grace1

 

T

Attachments
Compound Interest.xlsx
Compound Intere...