Heather puts $8,000 into her investment account that offers 5% interest per year. The interest isdue in 5 years. Annual inflation is expected to be 4% over the next 5 years. Heather's actualMARR is 7.5%, What is the present worth of the interest on investment? Total Value of Investment after five year = $8,000  (1 + 5%) ^ 5 = $8,000  1.2763 = $10,210.52 Total Value of Investment after five year is $10,210.52. Total Interest income = $10,210.52 - $8,000 = $2,210.52 Total Interest earned is $2,210.52. MARR = 7.50% Current Value of interest on investment = $2,210.52 / (1 + 7.50%) ^ 5 = $2,210.52 / 1.4356 = $1,540 present worth of the interest on investment is $1,540

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Heather invested 8000 at a nominal interest rate of 5 per year The interest is due in 5 ... View the full answer