A deposit of $500 (PV) made five years ago is worth $705.30 today (FV). The deposit pays interest semi-annually: Money and Capital Market Assignment, TARC, Malaysia
QUESTIONS:
1. A deposit of $500 (PV) made five years ago is worth $705.30 today (FV). The deposit pays interest semi-annually. What is the interest rate?
Note: If you press √ means that the reciprocal of power 2 (^2). In this calculation, it refers to power 10@ ^ 10, therefore 10√ From calculator, you press 10 then SHIFT then ^..10 x√ 1.4106
FV = PV (1 + r) t – annually
FV = PV (1 + r/2) tx2 – semiannually
2. How much would you have had to invest 21 years ago (t) in an account paying 6%(r) compounded annually to cover the cost of a $15,000 (FV) engagement ring for your fiancé?
3. Approximately how many years must one wait for an initial investment of $10,000 to triple in value if the investment earns 9% compounded annually?
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