Explanation: TV=A(1+R)^N
2.a) FV= 1700+(1700*.05)*5
b) FV= 1700*(1.05)^5
1.)Find the future value of the given amount.
$6000 at 6% compounded annually for 16 years.
2.)Suppose you invest $1700 in an account at 5% for 5 years.
a. Find the future value if the account offers simple interest.
b. Find the future value if the account compounds interest annually.
3.)Inflation is the rise in the general level of consumer prices. Although there is no one perfect measure of inflation, each month the Bureau of Labor Statistics surveys prices and generates the Consumer Price Index (CPI). Inflation is often given as the percent increase in the CPI. In July 2004, the CPI was reported to be 2.99%. When determining the effect of inflation in the problem below, use the compound-interest formula with interest compounded annually.
-In July 2004 you see an ad for a round, 1-carat diamond ring selling for $7600.00. If inflation remains constant at 2.99% and the price of the ring changes only due to inflation, how much will the ring cost you 1 year later?
-Suppose that rather than buying the ring, you invest $7600.00 in a 12-month CD at 2.85% compounded daily. How much money will you have in July 2005?
-Will you be able to buy the ring in July 2005?
4.)What is the annual percentage yield (APY), to the nearest hundredth of a percent, on a savings account paying an annual interest rate of 3.49% compounded monthly?
5.)According to a site, the 3.49% compounded daily were available for 2-year CDs with a $10000 deposit in Countrywide Bank.
