How much is interest earned on interest

Assignment Help Financial Management

Reference no: EM131568081

a) Consider a $3,000 deposit earning 9 percent interest per year for four years.

What is the future value? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Future value $

How much total interest is earned on the original deposit? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Total interest earned $

How much is interest earned on interest? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

Interest earned on interest

b) Which cash flow would you rather pay, $530 today or $700 in four years if interest rates are 8 percent?

c) What is the value in year 4 of a $2,000 cash flow made in year 6 if interest rates are 10 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

d) How many years will it take $2 million to grow to $4.00 million with an annual interest rate of 7 percent? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

e) At age 33 you invest $1,000 that earns 8 percent each year. At age 43 you invest $1,000 that earns 11 percent per year.

In which case would you have more money at age 60?

Reference no: EM131568081

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