4.1 4.2 4.6 and 4.7

PROBLEMS 4-7 If Samantha invests $700 today in an account that pays 4 percent interest compounded annually how much will she have in her account four years from today? What is the will pay $2, rate is 9 per terly, and ( when inter 4-1 Fifteen (15) years ago, your parents purchased an investment for $2,500. If the investment earned 6 percent interest each year, how much is it worth today? 4-2 4-8 IfQuincy c to 12 perce sum an $22,0G 4-3 Fiona plans to invest $500 later today. She wants to know to what amount her investment will grow in 20 years if she earns 12 percent interest com- pounded (a) annually, (b) quarterly, and (c) monthly. 4-9 Suppos next eigh is 7 perce will your i payment amount it ning of ea 4-4 Staci invested $950 five years ago. Her investment paid 7.2 percent interest compounded monthly. Staci's twin sister Shelli invested $900 at the same time. But Shelli's investment earned 8 percent interest compounded quarterly. How much is each invest- ment worth today? What is the present value of $1,500 due in 14 years at a (a) 5 percent interest rate and (b) 10 percent rate. Explain why the present value is lower when the interest rate is higher 4-10 At the enc deposited compoun account t account if each year 4-5 Matt is considering the purchase of an invest- ment that will pay him $12,500 in 12 years. If Matt wants to earn a return equal to 7 percent per year (annual compounding), what is the maximum amount he should be willing to pay for the invest- ment today? 4-11 Suppose pounded an accour the end o must you the begin 4-6 80 PART TWO: Essential Concepts in Managerial Finance