Westonci.ca is your go-to source for answers, with a community ready to provide accurate and timely information. Ask your questions and receive detailed answers from professionals with extensive experience in various fields. Experience the convenience of finding accurate answers to your questions from knowledgeable experts on our platform.
Sagot :
The amount that needs to be invested today at an interest rate of 5. 5% is determined to be $ 420,824.
Interest rate:
- A fee charged by a lender to a borrower known as an interest rate is computed as a percentage of the principal, or the loaned amount. The annual percentage rate, or APR, is typically used to express the interest rate on a loan (APR).
- Given, Future value of the car F=$ 550,000
- Rate of interest (i) =5.5% per annum Interest time periods (n)=5 years.
- PART 1:In the provided problem, the future worth of an automobile, the interest rate, and the length of the investment are all predetermined.
- Calculating the amount that must be invested now in order to obtain cash equivalent to the car's future value at the conclusion of the investment period is required.
- For this purpose, we will need to apply the PRESENT WORTH COMPUND AMOUNT FACTOR (PWCAF). This factor can be expressed as: P W C A F=[tex]\left(\frac{P}{F}, i, n\right)=\frac{1}{(1+i)^{n}}[/tex]
- PART 2:The total amount that needs to be invested today can be computed as: P=P W C A [tex]\times F=\frac{F}{(1+i)^{n}} \\[/tex]
- P=[tex]\frac{550000}{(1+5.5 \%)^{5}} \\[/tex]
- P=420824 [Rounded off to whole dollars]
- Thus, the amount that needs to be invested today is determined to be: $ 420,824
Learn more about interest rate here brainly.com/question/25793394
#SPJ4
We hope this information was helpful. Feel free to return anytime for more answers to your questions and concerns. Thank you for your visit. We're committed to providing you with the best information available. Return anytime for more. Thank you for trusting Westonci.ca. Don't forget to revisit us for more accurate and insightful answers.