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If $4000 is invested at 2% interest, find the value of the investment at the end of 6 years.
An investment of $4000 is deposited into an account in which interest is compounded continuously. Complete the table by filling in the amounts to which the investment grows at the indicated interest rates.
t = 5 years
Rate per year Amount
1%
2%
3%
4%
5%
6%

Sagot :

anthougo

Answer:

a. Value of investment at the end of 6 years = $4,504

b. Table Completion:

Rate per year  Future Value Factor   Amount

1%                         1.051                         $4,204

2%                        1.104                          $4,416

3%                        1.159                         $4,636

4%                        1.217                         $4,868

5%                      1.276                          $5,104

6%                      1.338                         $5,352

Explanation:

Data and Calculations:

Investment = $4,000

Interest rate = 2%

Period of investment = 6 years

Future value factor at 2% for 6 years = 1.126

Value of investment at the end of 6 years = $4,504 ($4,000 * 1.126)

b) Investment = $4,000

Interest rates = from 1% to 6%

Period of investment, t = 5 years

Future value factors are as follows:

Rate per year  Future Value Factor   Amount

1%                        1.051                         $4,204 ($4,000 * 1.051)

2%                       1.104                          $4,416 ($4,000 * 1.104)

3%                       1.159                         $4,636 ($4,000 * 1.159)

4%                       1.217                         $4,868 ($4,000 * 1.217)

5%                      1.276                          $5,104 ($4,000 * 1.276)

6%                      1.338                         $5,352 ($4,000 * 1.338)

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