# Compound Interest - 19729

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## studentlance

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• Posted on: Fri 26 Jul, 2013
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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 Â– Returns the present value of a future amount

PMT Â– Calculates the payment necessary to accumulate a future amount

Compound Interest Formulas:

A = P(1 + i)n

 FV = PMT Ã— (1 + i)n Â– 1 Â Â i

Â

 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

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