Blit's Miscellaneous Maff's Question Thread (1 Viewer)

[BLIT2014]

30.3.16

You plan to save $1,250 at the end of each of the next three years to pay for a vacation. If you can invest it at 7% per annum compounded annually, how much will you have at the end of three years? 

A $9,578.08
B $3,280.40

C $4,018.63**

D $3,750.00

E None of the above

How do I get c?

I think I'm meant to use the Present Value of an ordinary annuity formula :/

 

[Spiritual Being]

Yeah this is just the annuity formula. You're working out a future value so use that formula.

1250 * ((1+0.07)^3 -1 / 0.07) = 4018.625 rounded to 4018.63

#mymajorisaccountingtho

 

[BLIT2014]

10.Marcie Witter is saving for her daughter’s education. She can invest $10,000 at the end of year 1 and $12,000 at the end of year 2. How much will she have saved by the end of year 3 if her investment pays 10 percent per annual compounded quarterly?
A $25,429.78 *

B $18,908.47

C $25,300.00

D $19,008.26

E None of the above

 

[Spiritual Being]

10,000(1+0.025)^4 =11038.12891 (round up at the end)

(compounded quarterly = 4, also divide interest rate by 4)

11038.12891 + 12,000 (since this is what is in your bank account the second year) = 23038.12891

23038.12891(1+0.025)^4

(same as above)
= $25,429.78367 rounded to 25,429.78

 

[BLIT2014]

10,000(1+0.025)^4 =11038.12891 (round up at the end)

(compounded quarterly = 4, also divide interest rate by 4)

11038.12891 + 12,000 (since this is what is in your bank account the second year) = 23038.12891

23038.12891(1+0.025)^4

(same as above)
= $25,429.78367 rounded to 25,429.78

Thanks.