Question
In this problem you will be calculating compound interest on 4 different deposit amounts. For each deposit amount, you will calculate the value of the
In this problem you will be calculating compound interest on 4 different deposit amounts. For each deposit amount, you will calculate the value of the deposit using 2 different interest rates compounded for the same number of years. I recommend you place this data into a Microsoft Excel workbook to make the calculations easier.
Notice the difference a small change in interest rate yields on the ending value of the deposit. Calculate the difference in the value of the deposit (take 1 value less the other), but enter the difference in absolute terms (i.e. all values are positive). For example if the difference is -$100, the absolute difference is $100 (which is the magnitude of change, direction is not important).
AFTER you have completed ALL your calculations, including FV & differences in value of deposit, round your answers to the nearest whole dollar and include dollar signs and commas to separate thousands. Do NOT round PRIOR to completing ALL your calculations, this may throw off 2 answers if you do. Do not place spaces before after $ signs and commas. Remember, all difference values must be in absolute terms.
Amount Deposited | Interest Rate (annual) | Period (years) | Value of Deposit After Period (years) |
$550,000 | 5.0% | 3 |
|
$550,000 | 2.0% | 3 |
|
Difference in Interest Rate | 3.0% | Difference in Value of Deposit |
|
|
|
| |
$750,000 | 7.5% | 3 |
|
$750,000 | 6.0% | 3 |
|
Difference in Interest Rate | 1.5% | Difference in Value of Deposit |
|
|
|
| |
$3,200,000 | 2.5% | 5 |
|
$3,200,000 | 2.0% | 5 |
|
Difference in Interest Rate | 0.5% | Difference in Value of Deposit |
|
|
|
| |
$15,800,500 | 6.0% | 10 |
|
$15,800,500 | 4.0% | 10 |
|
Difference in Interest Rate | 2.0% | Difference in Value of Deposit |
|
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